ANNUAL REPORT 2017 - Caudan Waterfront · Limited is pleased to present its annual report for the year ended June 30th 2017. ... been incurred as part of our feasibility studies for

ANNUAL REPORT 2017

2 message to shareholders4 financial highlights5 performance summary 6 corporate information8 chairperson’s statement 16 corporate governance report32 company secretary’s certificate/ statement of compliance34 independent auditors’ report

to the members 38 statements of financial position 39 statements of profit or loss and

other comprehensive income 40 statements of changes in equity 41 statements of cash flows 42 notes to the financial statements

2

Dear shareholder

The board of directors of Caudan Development Limited is pleased to present its annual report for the year ended June 30th 2017.

The activities of the group continued throughout 2017 to be property development and investment and the provision of security services.

Caudan Development specialises in the ownership, promotion and development of Le Caudan Waterfront, a mixed commercial project on the waterfront of Port Louis. Apart from the waterfront project, the company also rents out industrial buildings situated at Pailles and Riche Terre.

Caudan, via a subsidiary, operates in the security business, and is involved in the sale of alarm equipment and the provision of security and property protection services.

The audited financial statements have been approved by the board on September 28th 2017.

Yours sincerely

Jean-Pierre Montocchio Chairperson

René Leclézio Executive Director

C A U D A N D E V E L O P M E N T L I M I T E D 2 0 1 73

Blue Penny Museum

4Caudan Development which is listed on the Stock Exchange of Mauritius is a subsidiary of Promotion and Development which holds an effective 70.62% stake in the company

2 0 1 7 2 0 1 6 restated* MRs MRsGroup shareholders’ funds 3.9bn 2.9bn

Group net asset value per share 1.97 2.94Share price 1.09 0.98

MRe MReEarnings per share 0.045 0.011Adjusted earnings per share 0.052 0.011Dividends per share 0.04 -

FINANCIAL HIGHLIGHTS

L’Observatoire


2 0 1 7 2 0 1 6 restated* % %

Group net asset return (1) (31.6) 0.3Group net asset return (2) 2.7 0.3(1) The growth in net assets plus dividends declared expressed as a percentage of the net assets at the beginning of the year

(applicable to shareholders who have not taken up their rights issue entitlement).

(2) The growth in net assets plus dividends declared less cost of new share subscribed expressed as a percentage of the net assets at

the beginning of the year (applicable to shareholders who have taken up their rights issue entitlement).

Total shareholder return (1) 15.3 (14.0)Total shareholder return (2) 28.6 (14.0)(1) The growth in the adjusted share price plus dividends declared expressed as a percentage of the adjusted share price at the begin-

ning of the year (applicable to shareholders who have not taken up their rights issue entitlement).

(2) The growth in the adjusted share price plus dividends declared less cost of new share subscribed expressed as a percentage of the

adjusted share price at the beginning of the year (applicable to shareholders who have taken up their rights issue entitlement).

Group annualised returns to June 30th 20175 years 1.110 years ** 5.2Compound annual total return in terms of increase in net assets plus dividends.

* For comparative purposes, the figures above take into consideration the prior year adjustment and the number of shares after the

Bonus Issue.

** Net assets prior to 2011 have not been restated in respect of prior year adjustments reflected in the accounts.

PERFORMANCE SUMMARY

Central Post Office

directors

Jean-Pierre Montocchio ChairpersonBertrand de ChazalCatherine Fromet de Rosnay appointed September 2016Gilbert GnanyRené LeclézioJocelyne MartinSeedha Lutcheemee NullatembyAntoine SeeyaveBernard Yen

Aapravasi Ghat

CORPORATE INFORMATION


corporate governance committee

Catherine Fromet de Rosnay Chairperson as from December 2016Bertrand de Chazal Acting Chairperson up to December 2016René LeclézioJean-Pierre Montocchio

audit committee

Bertrand de Chazal ChairpersonGilbert GnanyBernard Yen

management company

Promotion and Development Ltd

company secretary

Jocelyne Martin

auditors

BDO & Co10 Frère Félix de Valois Street,Port-Louis, Mauritius

registrar and transfer office

MCB Registry & Securities Ltd Sir William Newton Street Port Louis, Mauritius

registered and postal address

Promotion and Development Ltd8th Floor, Dias Pier, Le Caudan WaterfrontPort Louis, Mauritius

Telephone +230 211 94 30Fax +230 211 02 39 Email [email protected]

date of incorporation

February 17th 1989

Citadel/Fort Adélaide

8 results

Our net profit after taxation for the year 2017 stood at MRs76.1m (2016: MRs10.8m). Our revenues increased to MRs492.1m (2016: MRs461.5m) while our operating expenses decreased to MRs375.2m (2016: MRs392.9m). The improved performance in our top-line results stems largely from broad based advances across all of our revenue lines, especially in our property segment. We are particularly encour-aged by the improved performance of our office and commercial segments, which serve as a testament to Le Caudan Waterfront’s continued strong appeal. During the year, the Board decided to proceed with the write-off of capital costs of MRs15m, which had been incurred as part of our feasibility studies for an apartment project on the Caudan Peninsula. After due consideration, your board decided that this development would not be appropriate at this stage of Caudan’s growth and development, but nevertheless a residential phase remains topical for the future of Caudan. Our results also include a positive adjustment of MRs2.7m, representing the fair value gain on revaluation of our investment property net of the related deferred tax thereon. I would like to stress that these adjustments have no impact on the cash flows of the business.

Although our security segment registered an improved net profit after tax of MRs1.7m (2016: loss of MRs1.6m), this remained below our expec-tations for the year under review. A recent audit of our operations has led to enhancements of our go-to-market strategy and the identification of new business lines, which draw upon the business’ existing strengths and assets. This is expected to bring meaningful growth to the business.

Our associate LCW Casino posted losses for the period and continues to carry accumulated losses such that our investment therein has been main-tained at nil. Nevertheless, we believe that with some effort and commitment from all involved, the casino should be able to move back to a profitable situation and we will again see positive contribu-tions. At Caudan, we remain confident of the strong upside potential of our investment.

The past financial year has been an eventful one for Caudan Development. You will note improved results in both our top and bottom-line performance, which are due to a combination of modest improvements across all of our business lines, cost efficiencies and a reduced interest coverage burden thanks to the successful Rights Issue carried out during the financial year. Our goal is and always has been to drive sustained financial outperformance over the long term and generate solid capital and income growth for shareholders. Thanks to our improved performance this past year, your board was pleased to return a dividend of 4 cents per share to our valued shareholders.

Despite these marked improvements from past periods of uncertainty, we remain wary of what the future may hold and continue to tread lightly and diligently when it comes to the fulfilment of our strategic objectives.

Visitors to Le Caudan Waterfront will undoubtedly spot that construction works are under way for Phase III of Le Caudan Waterfront, the Caudan Arts Centre, marking an exciting chapter in our shopping mall’s history.

Dear Shareholder

CHAIRPERSON’S STATEMENT

Jummah Mosque

Place d’Armes

9C A U D A N D E V E L O P M E N T L I M I T E D 2 0 1 7

10more strenuous times, Caudan was able diligently to adapt its strategy, to capitalise upon its unique assets and to retain its position as one of the lead-ers in the shopping mall industry in Mauritius.

Today, the industry faces a new and different chal-lenge, one that will keep us on our toes for the foreseeable future: online shopping. While we have up until recently, needed only to contend with local competitive forces, online shopping has brought in a very real way the effects of globali-sation into Caudan’s boardroom. There are two noteworthy reasons why the online shopping move-ment is gathering momentum. On the one hand, a flurry of operators on the international scene are using the cost benefits of essentially operating as a distribution facility to sell goods at prices which are impossible for brick and mortar operators to match. On the other hand, because of the modus operandi of these organisations, the traditional product offer-ing constraints of brick and mortar stores no longer apply. With a website as a storefront and a ware-house for stock storage, e-retailers are able to offer a huge amount of product choices to their visitors. This in turn bodes well for delivery services, that are able to sustain lower price points, which they offset against increased volumes, thereby further increas-ing the appeal of online shopping. So where does all this leave Le Caudan Waterfront?

Through careful monitoring of the developments in this space, we have been adapting the positioning of the centre accordingly. The need for social inter-action and leisure time remains a core need of the human condition. Thus, while an individual may have made a proportion of his purchases through a convenient online medium, he must still satisfy his need for social interaction and leisure time, and therein lies the appeal of Le Caudan Water-front. Whereas other centres on the island attract clientele largely thanks to the supermarkets at their core, Le Caudan Waterfront comes in as the quin-tessential destination for tourists and locals who need to satisfy their need for a fun outing experi-ence. With arts and culture as part of our DNA, a magnificent waterfront position at our doorstep and a unique blend of tenants, Le Caudan Waterfront firmly distinguishes itself from the competition and is in a truly unique position to continue to thrive despite the lingering threats that face us.

Following the successful Rights Issue carried out during the year, Caudan’s share capital increased by MRs1bn. The underlying net asset value per share (NAV) of Caudan stood at MRs1.97 at June 30th 2017. This stands in contrast to an adjusted NAV of MRs2.94 at June 30th 2016, prior to the Rights Issue. The net result is an increase in the group net assets of 34 per cent for the year under review from MRs2.94bn in 2016 to MRs3.94bn in 2017. Our compound annual return in terms of increase in net assets per share plus dividends stands at 1.1 per cent for the last 5 years and at 5.2 per cent for the last 10 years. The share price closed at MRs1.09 on June 30th 2017, at which point Caudan shares were trading at a 44.7 per cent discount to their NAV. On top of this hefty discount to NAV, based on the mar-ket values of Caudan’s shares, shareholders who participated in the Rights Issue would have found themselves with an effective gain of 28.6 per cent including dividends for the period from June 30th 2016 to June 30th 2017.

Le Caudan Waterfront

We were pleased with our improved performance this year. Our refurbishment program resonated positively with our patrons and tenants, while our unrelenting focus on capitalising upon our natural strengths allowed us to thrive in a strenuously com-petitive environment.

The shopping mall’s role in society is changing. Only a decade ago, the shopping mall was the quin-tessential go-to place for one’s shopping needs. Its appeal was evident in that customers could find everything they might need in a central location, which offered ample parking facilities in addi-tion to a variety of food and leisure options for the entire family. This made for an attractive business proposition for both the shopping mall tenants and developers, which in turn led to an increased supply of shopping malls around the world and in Mauritius. This was not necessarily a bad thing for incumbent providers such as Caudan. More com-petition meant that the centre had constantly to revisit its operating strategy and thus, to innovate in order to offer the best customer experience to its patrons. The proof of the pudding is in the eat-ing, and in our case, the proof is in the improved results we present to you in this report. Through the


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entconsiderable amount of thought, work and energy

is being channelled to ensure that the customer is enthralled from start to finish when visiting the arts centre. Starting from the access and parking, new amenities and technologies are being provided so that sufficient parking is readily available and to make the process of arriving, securing and exiting the centre as smooth as possible. In the theatre, special care has been put into providing the most comfortable experience; from carefully selected seat fabric and silent underfoot air-conditioning to ensuring all seats have excellent sightlines and sound coverage. The central location at Le Caudan Waterfront entails that the audience has access to a wide variety of dining and entertainment options, which complement the activities held within the theatre. Le Caudan Waterfront has long suffered from issues of poor night-time footfall and with this initiative we expect to see a reversal of this trend with tenants being more inclined to open for longer hours given the increased appeal, thus leading to increased patronage.

Supplementing the theatre activities will be a mix of conferences and corporate events. Our main theatre will cater for over 400 delegates, while our modular smaller conference rooms can host anything from 30 to 200 guests for those smaller events or serve as breakout rooms during major conferences. While there are a number of conference venues in Mauritius, there remains a market imperfection in that the capital city, Port Louis, is the primary host of professional and business life on the island, but yet does not have any major conference facilities. Through our market research, we have identified that there is a strong demand for this type of service in the capital city, and Le Caudan Waterfront is ideally positioned through the Caudan Arts Centre to cater to this demand.

property operations

Our property segment had a productive year with a top line increase of 13.0 per cent in gross rental income to MRs254.0m from MRs224.8m a year earlier. Furthermore, property operating expenses decreased by 9.8 per cent to MRs139.3m from MRs154.5m in the previous year. Consequently our ability to generate strong growth in sales

In order to strengthen our value proposition, we have also been keenly involved with stakehold-ers at both the private and public sector level in shaping the Port Louis of tomorrow while maintain-ing the charm of yesteryear. The future is indeed exciting and will see a world-class aquarium and a revamped Port Louis Waterfront flank Le Caudan Waterfront. Improved road infrastructures into Port Louis and the government light-rail metro arriv-ing at Caudan’s front door will bring the necessary infrastructure to support the expected increased traffic into Port Louis. There are a number of other initiatives which involve both large and small-scale initiatives. These are expected to come into play soon and will re-invigorate our beloved capital city. Caudan remains at the forefront of the trends that shape us and has already begun work on the Caudan Arts Centre, which will add yet another dimension to Caudan’s offering and to Port Louis.

The Caudan Arts Centre

As I said previously, you will have undoubtedly witnessed the construction works underway on the Caudan Arts Centre. Delays in securing the necessary permits meant we needed to revise our expected completion date of March 2018, but we are now well underway and on track for completion late in 2018. We invite you to visit our new website: caudanartscentre.com to get a sense of the exciting things to come. In the background, we are arduously working on our programming for the 2018/2019 season. The interest we have received from artists and event organisers thus far, both locally and overseas, has been very encouraging, so much so that some months in 2019 are already fully booked. This is not a mystery considering the array of advantages that hosting a performance at the Caudan Arts Centre brings. From an artist’s standpoint, the theatre offers a level of quality and sophistication not before seen in Mauritius. It is a place where all the effort that goes into a production can be showcased without compromise, thus allowing the artist or event organiser to deliver a truly memorable experience. A performance, from the perspective of the audience, comes down to just that, the experience. An experience can however easily be tainted if the services which surround the performance are not up to par. A

Jardin de la Compagnie

C A U D A N D E V E L O P M E N T L I M I T E D 2 0 1 713while efficiently managing our costs has led to our net operating income (excluding fair value gain) increasing by a hefty 63.2 per cent to MRs114.7m from MRs70.3m a year earlier.

From the top line perspective, the year ended June 30th 2017 marked the first financial year since the end of our refurbishment program where we oper-ated at our full earnings potential in our commercial rental segment. As an industry standard, shopping malls operate with a natural vacancy rate, which is the result of underperforming tenants leaving as well as the mall management making necessary adjustments to the tenant mix in order to optimise the mall’s positioning strategy. During the year under review, Le Caudan Waterfront went through a tenant recycling phase as a result of the factors mentioned above. As these gaps are being compen-sated for, we expect to see modest improvements in our top line performance from this segment later on this year.

As expected, our office rental segment had another good year with near full uptake of all of our office space from high calibre businesses, who enjoy the prime space within Le Caudan Waterfront. Further-more, we have already had expressions of interest for the office space planned in Phase III from our existing tenants, an encouraging sign for the pros-pects of Phase III.

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Government House

security operations

Despite a net prof it af ter tax improvement to MR s1.7m (2016: loss of MR s1.6m), our security segment’s per formance fell shor t of our expectations. Operating profit increased to MRs2.1m from a loss of MRs1.7m in the prior year. Top line revenue increased to MRs262.8m from MRs260.6m in the prior period, and operating expenses decreased marginally to MRs260.7m (2016: MRs262.3m).

Although these are better results than in the prior period, the growth which we had expected during the financial year has materialised itself in a much slower fashion than we had anticipated. Nevertheless, as the old saying goes, slow and steady wins the race. Although the development opportunities which we had identified in the prior financial cycle have been slow to come to the fore, they remain in the pipeline and should have a positive impact on next year’s results.

Meanwhile in the background, we have also been working on diversifying our product and services base by expanding into new product offerings and services, which have both a B2B as well as a B2C focus. As we continue to work in partnership with international players, and as a company heavily biased towards technology, so too have our marketing strategies evolved. You will note our revamped website, which is supported by a greater push into online marketing as a way of reaching our potential customers ahead of our competitors.

14While we expect to see some improvements from these initiatives in the next f inancial year, any foray into new products and services carries with it a growth phase where more often than not, the company sees a muted response on its bottom line. This is a necessary step for any business to go through as it favours long term prosperity versus short term pain. We thus approach next financial year with caution, but looking forward beyond this, we anticipate healthy growth in our bottom line results.

indebtedness

At June 30th 2017, the group had no borrowings on its balance sheet (2016: MRs845.1m). Mean-while cash balances remained steady at MRs0.3m and surplus funds amounting to MRs141.1m were advanced to the parent company.

As you are well aware, the proceeds of MRs1bn from the Rights Issue are to be used primarily for the financing of Phase III with any remaining funds being channelled towards the reduction of the debt burden of the group. As the payment for construction works is staggered throughout the construction period, only a fraction of the total construction costs had been incurred at balance sheet date, meaning that the remaining funds could be directed to reducing the company’s debts. This is a transitory situation: as construction works progress, so too will Caudan’s borrowings. Looking forward to next financial year, our borrowings will increase but should remain well below the figure of MRs845.1m recorded in 2016. The reduction in the REPO rate by 50 basis points will contribute to alle-viate the burden on the company by reducing the company’s interest expense. Further down the line, we expect to see higher yields from the investment in Phase III, which will help support the interest costs which were previously only supported by Phase I & II. The end result from balancing this equation will not only be positive for sharehold-ers, but will ultimately safeguard positive returns long into the future. Thanks to the aforementioned measures, we expect to have more financial flex-ibility in the future and hope to be able to return to our shareholders a larger slice of our earnings.

prospects and outlook

Despite the industry challenges that linger, new shopping malls continue to propagate on the island. Meanwhile the consumer remains stymied by sticky wages and persistent inflationary trends, and tenants continue to be tempted by ‘bigger and better’ offers, which often cloud them from the eco-nomic realities of their business.

As I have stated earlier, we are faced with a hard truth in that the shopping mall’s place in society is changing. Having pioneered this industry in Mauri-tius in the mid 90’s, we have endeavoured to retain our entrepreneurial spirit and remain ahead of the curve, every step of the way. As we strive today to anticipate the challenges of tomorrow, we realise that the future is nigh and that this trait has never been more important than it is today. We are diligently shaping the shopping mall of tomorrow, which will respond to the future cus-tomer’s needs. We do so while keeping a sharp eye on our finances and we are confident that we are on the right path to continue to deliver sustained financial outperformance and solid income growth long into the future.

We are further comforted by the numerous initia-tives aiming to breathe new life into our beloved capital city, which have come to the fore over the past couple of years. On top of all these initiatives, the transition period for the Landlord and Tenant Act will end on December 31st 2017. For many years, this legislation, originally aimed at protect-ing tenants from the devastating effects of cyclones in 1960, has hindered property owners from refur-bishing their buildings. As property owners regain control over their assets, we expect Port Louis to undergo a facelift, which will complement all the various initiatives planned in the capital.

We thus look to the future with an eye of cautious optimism. All the initiatives and developments planned for Port Louis will take time to materialise and the benefits will only be felt in the longer term. Furthermore, as the industry faces disruptive forces once more, we will brace for repercussions in the


short term but are confident that in the long-term, thanks to our hard work, we will emerge as one of the dominant players in the market.

To conclude, I would like to offer my warmest thanks to all those people who contribute to the group’s success. In particular, I would like to thank our highly committed staff for their dedication and team spirit. It is this spirit which allows Caudan to showcase its vibrant qualities to all its patrons, thereby creating an ecosystem which we all can be proud of. In turn, I would like to thank our valuable tenants for being a part of this wonderful story that is Caudan. Finally, my sincere gratitude goes out to all our board members for their sage guidance throughout the year.

Yours sincerely

Jean-Pierre Montocchio ChairpersonSeptember 30th 2017

St Louis Cathedral

16holding structure

At June 30th 2017, the capital structure of the company was MRs2,000,000,000, represented by 2,000,000,000 ordinary shares of MRe1.00 each and there were 3,144 shareholders on the registry.

At a special meeting of shareholders held on August 10th 2016, the shareholders approved a Bonus Issue of 0.220226474 new ordinary share for each ordinary share held and thereafter a Rights Issue of one new ordinary share for each ordinary share held at an issue price of MRe1.00 each.

Following the Bonus Issue and Rights Issue, the issued share capital of the company stood at MRs2bn made up of 2,000,000,000 ordinary shares of MRe1.00 each.

shareholders holding more than 5% of the share

capital of the company at June 30th 2017

shareholder number of shares % held

Promotion and Development 1,217,257,922 60.86

Ferryhill Enterprises 195,236,234 9.76

1,412,494,156 70.62

Fincorp Investment 106,790,072 5.34

Subsidiaries and associates of the company are listed in notes 6 and 7 respectively of the financial statements.

group structure as at June 30th 2017

The holding structure up to and including Promo-tion and Development Ltd, the ultimate parent, is shown overleaf.

common directors

common directors within the holding structure of

the company

at June 30th 2017 Promotion and Development

Jean-Pierre Montocchio >René Leclézio >Bertrand de Chazal >Catherine Fromet de Rosnay >Gilbert Gnany >Jocelyne Martin >Bernard Yen >

compliance statement

The board supports and is committed to attain and maintain the highest standards of corporate governance, including the principles of openness, integrity and accountability.

The board strives to comply substantively with the principles and guidelines set out in the Mau-ritian new National Code of Corporate Governance (NCCG) in Mauritius, which marks an important step in the Corporate Governance regime of Mauritius. The company recognises the need to improve the principles and practices in the light of the new code and is currently in the process of implementing the necessary changes so as to be fully compliant therewith. The promotion of good corporate govern-ance values, however, underlies the organisation’s decisions and actions.

This report sets out the company’s main corporate governance processes. The board has applied the principles of the Code in all material aspects except for section 2.8.2 of the Code, as explained on page 29.

adoption of a new constitution

A new constitution was adopted in July 2016 which replaced the existing Memorandum and Articles of Association. The main changes brought about by the new constitution were made to incorporate the major legislative changes which have occurred since the adoption of the company’s Memoran-dum and Articles of Association in 1989. The new constitution now fully reflects the most modern developments in the corporate field.

CORPORATE GOVERNANCE REPORT

100%Ferryhill

Enterprises Limited

9.76% 50%

1%

50%

60.86%Caudan

Development Limited

(CDL)

Promotion and

Development Ltd

(PaD)

100%Caudan LeisureLimited

Caudan Communauté

100%Harbour Cruise

Limited

39.2%Le CaudanWaterfront

Casino Limited

100%Société

Mauricienne d’Entreprise

Générale Ltée

100%Best Sellers

Limited

100%Caudan Security

Services Limited

100%Security and

Property Protection

Agency Co Ltd

99%SPPA Co Ltd

50%Integrated

Safetyand Security Solutions Ltd

Promotion and Development Ltd (PaD)

18The audit committee and the board ensure that dividends are paid out only if the company, shall upon the distribution being made, satisfy the sol-vency test. Dividends are normally declared and paid once a year.

The board declared a final dividend of MRe0.04 per share in respect of the year ended June 30th 2017, subject to the shareholders’ ratification at the forthcoming Annual Meeting of Shareholders.

trend over the past five years

year dividend per share

cents

2017 4.0

2016 -

2015 -

2014 -

2013 4.0

the board of directors

The board of directors represents the sharehold-ers’ interests and is collectively responsible for the long-term success of the company, its reputation and governance. The board is responsible to all its shareholders and to its other stakeholders for leading and controlling the organization and meet-ing all legal and regulatory requirements and is also accountable for determining that the company and its subsidiaries are managed in such a way as to achieve its objectives.

The board has ultimate responsibility and is accountable for the performance and activities of the company. The role of the board is to oversee executive management and the proper functioning of the company, including inter alia:

> ensuring that the long term interest of the share-holders are being served, and safeguarding the company’s assets;

> assessing major risk factors relating to the group and its performance, and reviewing measures, including internal controls, to address and miti-gate such risks;

size of number number of % share- of shares holdingholding shareholders owned

1-500 shares 326 58,017 0.003

501-1,000 shares 194 131,642 0.01

1,001-5,000 shares 906 2,103,981 0.11

5,001-10,000 shares 327 2,216,848 0.11

10,001-50,000 shares 758 17,033,454 0.85

50,001-100,000 shares 200 13,834,611 0.69

Above 100,000 shares 408 1,964,621,447 98.23

Total 3,119 2,000,000,000 100.00

category number number of %

of shares holding

shareholders owned

Individuals 2,909 151,625,176 7.58

Insurance and

Assurance Companies 5 40,515,819 2.03

Pension and

Provident Funds 33 100,625,878 5.03

Investment and

Trust Companies 30 153,790,111 7.69

Other Corporate Bodies 142 1,553,443,016 77.67

Total 3,119 2,000,000,000 100.00

The number of shareholders given above is indicative,

having been obtained by consolidation of multiple port-

folios for reporting purposes.

dividend policy

The company’s objective is to provide value to its shareholders through optimum return on equity. The company does not currently have a formal dividend policy. The declaration amount and pay-ment of future dividends depend on many factors, including level of profits realised, cash flow and financial condition, expansion and working capital requirements, commitments with regards to future projects and other factors deemed relevant by the board. The company however aims at achieving a reasonable return and regular income in the form of stable dividends and as far as possible, intends to maintain or grow the dividend each year.

C A U D A N D E V E L O P M E N T L I M I T E D 2 0 1 719and the sector in which it operates. They are given the relevant governing documents of the company and meet executive management to familiarize with each of the group’s business and operation, its strength and weaknesses. This process contrib-utes to ensuring a well-informed and competent board.

The procedures and accountability for cer tain of the board matters are delegated under clearly defined conditions to board committees and exec-utive management and information is supplied to the board in a manner that enables the board to act diligently and fulfill its responsibilities. The board monitors regularly the effectiveness of the policies and decisions, including the implementa-tion and execution of its strategies.

The company’s constitution provides that the board of the company shall consist of a minimum of 7 and a maximum of 14 directors.

The board of Caudan is a unitary board and was, at June 30th 2017, made up of nine directors as set out on page 6. The board includes an appro-priate combination of executive directors (2), non-independent non-executive directors (5) and independent directors (2) to prevent one individual or a small group of individuals from dominating the board’s decision taking. Taking into account the scope and nature of operations of the group, the board considers that the current board of 9 direc-tors is commensurate with the sophistication and scale of the organization and appropriate to facili-tate the effective decision making.

The directors come from diverse business back-grounds and possess the necessary knowledge, skills, objectivity, integrity, experience and com-mitment to make sound judgements on various key issues relevant to the business of the company.

The executive directors are: Mr René Leclézio and Mrs Jocelyne Martin who are executive directors of PaD, the holding and management company of Caudan.

The non-independent non-executive directors are directors of PaD, major shareholder of Caudan and

> reviewing and approving management’s strategic and business plans, including developing a depth of knowledge of the business, understanding and questioning the assumptions upon which plans are based and reaching an independent judge-ment as to the probability that the plans and/or the forecasts can be realized;

> monitoring the performance of the management against budget and forecasts;

> reviewing and approving the acquisition and divestment policy and signif icant corporate actions and major transactions;

> approving the treasur y policy and raising of finance;

> assessing the effectiveness of the board;> ensuring ethical behaviour and compliance with

laws and regulations, auditing and accounting principles and the company’s own governing documents;

> considering sustainability issues, e.g environ-mental and social factors, as part of its strategic formulation; and

> per forming such other functions as are pre-scribed by law, or assigned to the board in the company’s governing documents.

The board charter and the committee charters are being reviewed in the light of the New Code and will be available for consultation on the website of the company in due course.

The chairperson is responsible for leadership of the board and for ensuring its effectiveness and for promoting high standards of corporate gov-ernance. He is also responsible for ensuring that the directors receive accurate, timely and clear information and that adequate time is available for discussion of all agenda items at board meetings and in particular strategic issues. He encourages the active participation of all board members in discussions and decisions, constructive relation between the board and management and effective communication with shareholders.

In accordance with the constitution of the com-pany, all directors shall retire from office and shall be eligible for re-election at each annual meeting of shareholders. Newly appointed directors are briefed on key information relating to the group

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20which did not diminish with time. After taking into account these factors, the board has considered and determined that Mr Antoine Seeyave continues to be regarded as independent director of the com-pany, notwithstanding having served for more than nine years.

With three female directors as board members, the board is also in line with the recommendation of the Code regarding the gender diversity.

All directors are expected to objectively discharge their duties and responsibilities in the interests of the company. All directors should make their best efforts to avoid conflicts of interests or situations where others might reasonably perceive such a conflict. The personal interest of a director, or per-sons closely associated with the director, must not take precedence over those of the company or its shareholders. Any director, who is directly or indirectly interested in a transaction or proposed transaction, is required to disclose the nature of his interest, at the meeting in which the transac-tion is discussed, and should not participate in the debate, vote or indicate how he would have voted on the matter.

All directors are expected to attend all meetings of the board, and of those committees on which they serve, and to devote sufficient time to the group’s affairs to enable them to properly fulfill their duties as directors. The dates of the meetings together with agenda items are scheduled up to one year in advance, with board meetings at least each quarter. However, on occasion, in addition to the regular scheduled meetings, it may be neces-sary to convene ad-hoc meetings at short notice as and when circumstances warrant, which may preclude directors from attending. Besides physi-cal meetings, the board and the board committees may also make decisions by way of written resolu-tions. Board meetings are chaired in Mauritius and participation by board members by means of tele-conference or similar communication equipment is permitted.

The directors are required to carr y out a self-appraisal of their individual and board evaluation and to report any shortcomings identified. The

as such they are not deemed to be independent. However, they are independent in both charac-ter and judgement and have wide experience and make important contributions to strategic issues and corporate governance.

There are 2 independent directors, proving a strong and independent element on the board. The objec-tive is to facilitate the exercise of independent and objective judgement on corporate affairs, and to ensure that discussion and review of key issues take place in a critical yet constructive manner.

The board has considered that the following direc-tors are regarded as independent directors of the company: Mrs Seedha Lutcheemee Nullatemby and Mr Antoine Seeyave.

For the period up to June 30th 2017, Mr Antoine Seeyave has been considered independent even though he has served on the board for more than nine consecutive years from the date of his first election. The board is of the opinion that Mr Antoine Seeyave, has been able to develop over time, increasing insights into the group’s business and operations and is therefore able to provide a sig-nificant and valuable contribution to the board as a whole. The board takes the view that a director’s independence cannot be determined solely and arbitrarily on the basis of the length of time. A direc-tor’s contribution in terms of experience, expertise, professionalism, integrity, objectivity and indepen-dent judgement in engaging and challenging the management in the interests of the group as he performs his duties in good faith, are more decisive measures in ascertaining a director’s indepen-dence than the number of years on the board. The board, which can have, according to the NCCG, “its own definition of independence”, considered and noted that notwithstanding that Mr Antoine Seey-ave has served on the board for more than nine years, his independence as director is not affected, as he continues to exercise independent judge-ment and demonstrates objectivity in his conduct and deliberations at board meetings. By diligently discharging his duties and exercising sound inde-pendent business judgement and objectivity in an exemplary manner in the interest of the company, he has exhibited a strong spirit of professionalism

C A U D A N D E V E L O P M E N T L I M I T E D 2 0 1 721company acts where appropriate on feedbacks from board members on improvements. The board also encourages its members to keep on enhanc-ing their knowledge and competencies through personal development programmes.

attendance at the board and its committee meetings

The board met six times during the year to consider all aspects of the company’s affairs and any further information which it requested from management. In addition, on two occasions, the directors unani-mously approved board decisions by way of written resolutions. Directors are kept regularly informed of the up to date business position of the group.

2 0 1 7 board of directors board committees

corporate audit governance

Jean-Pierre Montocchio 5 2 n/a

René Leclézio 5 2 n/a

Bertrand de Chazal 5 2 6

Catherine Fromet de Rosnay * 6 1 n/a

Gilbert Gnany 4 n/a 5

Jocelyne Martin 6 n/a n/a

Seedha Lutcheemee

Nullatemby 4 n/a n/a

Antoine Seeyave 1 n/a n/a

Bernard Yen 6 n/a 5

total meetings held 6 2 6

* appointed on the corporate governance committee in

December 2016

directors’ profiles

Jean-Pierre MontocchioChairperson and non-executive directorNotary public. Has participated in the National Committee on Corporate Governance. Director of various listed companies including MCB Group, Fincorp Investment, Promotion and Development, Rogers, New Mauritius Hotels, Les Moulins de la Concorde and ENL Land.

Bertrand de Chazal

Non-executive directorFellow member of the Institute of Char tered Accountants of England and Wales and Commis-saire aux Comptes. Worked during his career with Touche Ross, Paris and West Africa; retired as senior financial analyst of the World Bank. Director of Promotion and Development, MCB Equity Fund and MCB Capital Markets.

Catherine Fromet de Rosnayappointed September 2016Non-executive directorPartner at LEGIS & Partners. Holds a ‘Magistère de Juriste d’Affaires’ and ‘Diplôme de Juriste et Conseil d’Entreprise (D.J.C.E)’ from the Université de Paris II, Panthéon Assas. Practised as an in-house lawyer for nearly 8 years at the legal department of Nexans in Paris, formerly known as Alcatel Cable France. Involved in the negotiation and drafting of commercial and joint-venture agreements, corporate due diligence exercise, M&A operations, legal and taxation advice. Director of Promotion and Development.

Gilbert GnanyNon-executive directorHolds a Master’s degree in Econometrics from the University of Toulouse and a ‘DESS’ in Management/Micro-Economics from Paris-X. He is currently Chief Strategy Officer of MCB Group Ltd. Previously, he worked as Senior Advisor on the World Bank Group’s Executive Board where he was responsible for issues relating mainly to the International Finance Corporation and to the private and financial sectors. Prior to joining the World Bank, he was the MCB Group Chief Economist after having been the Economic Advisor to the Minister of Finance. During his career, he has been involved in various high-profile boards/committees. Amongst others, he chaired the Stock Exchange of Mauritius Ltd, the Statistics Advisory Council and the Statistics Board as well as having been a director of the Board of Governors of the Mauritius Offshore Business Activities Authority and of the Board of Investment. He was also a member of the IMF Advisory Group for sub-Saharan Africa (AGSA) and a member of the Senate of the University of Mauritius. Mr. Gnany was appointed Director of MCB Group Ltd in April

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222014 and he currently sits on its Risk Monitoring Committee and Strategy Committee. He is also a Board member of several companies within MCB Group, acting either as Chairperson or Director. He is the Chairperson of the Economic Commission of Business Mauritius which serves, inter alia, as a platform for public-private sector dialogue. Director of Promotion and Development.

René LeclézioExecutive directorDegree in Chemical Engineering, Imperial College and MBA, London Business School. Worked as a manager at Lloyds Merchant Bank, London, before joining the company as its general manager in 1988. Director of several private and public companies including Promotion and Development, Medine, EUDCOS, MFD Group, Swan Life and Swan General.

Jocelyne MartinExecutive directorBSc (Hons) in Economics, London School of Eco-nomics. Member of the Institute of Char tered Accountants of England and Wales. Trained with Deloitte Haskins + Sells (now part of PwC), London. After several years of experience in the UK, worked at De Chazal Du Mée before joining Promotion and Development in 1995 as Group Financial Control-ler. Was appointed director in 2004. She is also the Company Secretary. Director of Promotion and Development, Medine and EUDCOS.

Seedha Lutcheemee NullatembyIndependent directorFellow of the Institute of Chartered Secretaries and Administrators (FCIS) and also holds an MBA in Finance. She is also a qualified Stockbroker. She has been working at the State Investment Cor-poration Ltd for the past 28 years and has wide ranging experience in the field of Finance, Account-ing, Administrative and Corporate matters. She is a Director of various companies within the SIC Group. She is also the Chairperson of the Finance Committee and Director of Mauritius Educational Development Company Ltd.

Antoine SeeyaveIndependent directorChairman of Happy World and director of Ipro Growth Fund. Sloan fellow of the London Business School.

Bernard YenNon-executive directorFellow of the uk Institute and Faculty of Actuaries. Currently the Managing Director of Aon Hewitt Ltd, providing actuarial, pensions and other services in Mauritius and the African region. Has more than 30 years’ international consulting experience includ-ing 15 years with Mercer in Europe. Serves as the African representative on the Committee of Actuar-ies advising the UN staff pension fund since 2007. Also director of Promotion and Development, MCB Capital Partners and Mauritian Eagle Leasing.

Marie Reine de la Paix


Kwan Tee Pagoda

Madurai Mariammen Kovil

24related party transactions

For related party transactions, please refer to note 29 of the financial statements.

board committees

The board has the following committees, each of which has its own written terms of reference which deal clearly with their authorities and duties. Details of the most important committees are set out below:

The corporate governance committeeThe committee which incorporates the nomina-tion and remuneration committee is chaired by Mrs Catherine Fromet de Rosnay (previously Mr P. Arnaud Dalais) and comprises of Mr Bertrand de Chazal, an independent director and Mr Jean-Pierre Montocchio, a non-executive director as well as the group managing director, Mr René Leclézio. The committee is appointed by the board and makes recommendations to the board, on new appoint-ments to the board and on succession planning and generally on all corporate governance provi-sions to be adopted by the company and oversee their implementation. It also has responsibility for the compensation strategies, plans, policies and programs of the company and its subsidiaries and evaluating and approving the remuneration package and other terms and conditions of service applying to directors and senior executives.

The audit committeeThe committee is appointed by the board and comprises Mr Bertrand de Chazal, who chairs this committee and Messrs Gilbert Gnany and Bernard Yen. All three members of the committee have the relevant financial experience.

Amongst its other duties, the committee assists the board in fulfilling its financial reporting respon-sibilities. It reviews the financial reporting process, the audit process and monitors compliance with laws and regulations. It monitors the quality and integrity of the financial statements, and reviews interim financial reports and the annual financial statements prior to their submission to the board, and the application of the company’s accounting

directors’ interests in shares

The directors are aware of the contents of the Model Code on Securities Transactions by Direc-tors (appendix 6 of The Mauritius Stock Exchange Listing Rules 2000).

interests of the directors in the share capital of the

company and its subsidiaries at June 30th 2017

number of shares direct indirect

Jean-Pierre Montocchio - 319,698

Bertrand de Chazal - -

Catherine Fromet de Rosnay - -

Gilbert Gnany - -

René Leclézio - 305,056

Jocelyne Martin 158,628 -

Seedha Lutcheemee

Nullatemby - -

Antoine Seeyave - -

Bernard Yen 146,426 -

transactions during the year

Bonus Issue direct indirect

(number of shares)





purchases direct indirect

(number of shares)





senior executives profile

The profiles of Mr René Leclézio and Mrs Jocelyne Martin appear in the Directors’ Profiles section.

C A U D A N D E V E L O P M E N T L I M I T E D 2 0 1 725To mitigate the above risks, the company has developed various policies, processes, systems and methods which are reviewed regularly to ensure that they are managed on a timely basis and in an effective manner. The group is also exposed to financial risks such as market risk, credit risk and liquidity risk. The management of these risks is further discussed in note 1 of the financial statements.

In an effort to further strengthen the risk manage-ment framework to better respond to the risks in its changing environment, the holding company mandated MCB Consulting to conduct a business risk identification and assessment exercise across the group including Caudan and its subsidiaries. A business risk workshop was organised in June 2017 with the following objectives:

Sprout the implementation of a coherent and practical Enterprise Risk Management framework by:> identifying business risks which could impair the

achievement of the current and future strategic objectives;

> assessing the business risk by importance, like-hood of occurrence and impact;

> calculating the risk exposure; and> deriving a Risks Heat Map.

Link risk management to:> strategic planning and thinking;> capital sourcing, funding and financing;> information technology;> human resources; and> operations.

Strengthen the risk awareness culture and initia-tive among key resources of the organisation.

Under the guidance of MCB Consulting, the group is now putting in place a risk management frame-work and implementing the action plan to mitigate the business risks and/or to transform them into business opportunities.

policies. The committee reviews matters affect-ing the company’s financial and internal controls and their effectiveness and the management of financial risk. The committee also monitors risks identif ied and considered critical by manage-ment, including capital, market, reputational, strategic and operational risks; it reviews and monitors the development and implementation of the company’s risk management programme. The audit committee provides a forum through which the external auditors can report to the board and monitors their performance and independence. The board is satisfied that the audit committee has adequately discharged its responsibilities in com-pliance with its terms of reference.

Internal control and risk management policiesThe board is responsible for monitoring and main-taining a robust and effective internal control framework across the group and for identifying, evaluating and managing the group’s significant risks. The internal control system is designed to manage rather than eliminate the risk of failure of the group to meet its business objectives and as such can only provide a reasonable rather than absolute assurance against material misstatement or loss. The monitoring of the group’s system of internal control covers all controls, including finan-cial, operational and compliance controls and risk management.

Risk issues are systematically addressed at the audit, corporate governance and investment committees.

Some of the operational risks to which the com-pany is exposed are:

> physical: losses due to fire, cyclone, explosion etc.> human resources: losses arising from acts incon-

sistent with employment, health and safety laws.> business continuity: losses resulting from break-

down in systems, failure of internal processes, inadequate back-ups and loss of data.

> compliance: failure to comply with laws, reg-ulations, codes of conduct and standard of good practice relevant to the group’s business environment.

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The group did not during the year under review have an internal audit function as this was not con-sidered essential given the nature of the group’s business, and the central control and organisa-tional and approval structure in place across the group with clearly defined levels of authority and division of responsibilities. The company has clear and robust internal control procedures for the approval of all transactions, no matter what their size, through formal board committees and formally delegated authority limits. However ,in order to be in line with the new Code, the hold-ing company decided to recruit as from July 1st 2017 a group internal auditor, who will also evalu-ate all aspects of internal control of Caudan and its subsidiaries and assist the audit committee to ensure that the company maintains a sound system of internal controls. The internal auditor reports to the audit committee chairperson, and to the executive management on administrative matters. The audit committee approves the hiring and decides on the removal of the internal auditor and also ensures the adequacy and effectiveness of the internal audit function. The annual internal audit plan is established in consultation with, but independent of, Management, and is reviewed and approved by the audit committee. As from July 1st 2017, the audit committee and manage-ment review and discuss internal audit findings, recommendations and status of remediation at audit committee meetings. The internal auditor has unfettered access to the group’s documents, records, properties and personnel, including access to the audit committee.

The audit committee also reviews the external auditors’ reports and any recommendations for improvements in controls and procedures iden-tified in the course of their work and ensures the proper follow up of previous recommendations.

shareholders’ communication

The board places great importance on an open and transparent communication with all sharehold-ers and also endeavours to keep them regularly informed on matters affecting the company.

The company communicates to its shareholders through its Annual Report, publication of unau-dited quarterly and audited abridged financial statements of the group, dividend declaration, press announcements and the Annual Meeting of Shareholders to which all shareholders are encour-aged to attend.

An investor meeting was organised by the hold-ing company after publication of half-year results where the executives were able to update the local analysts and institutional investors about Caudan’s performance and strategic initiatives.

The company’s website is also an important means of effectively communicating with all stake-holders, keeping them abreast of developments within the group.

shareholders’ calendar

The company has planned the following forthcom-ing events:

Mid-November 2017 release of first quarter results to

September 30th 2017

December 2017 annual meeting of shareholders

Mid-February 2018 release of half-year results to

December 31st 2017

Mid-May 2018 release of results for the nine

month period to March 31st 2018

June 2018 declaration of final dividend

End-September 2018 release of full year results to

June 30th 2018

Mid-November 2018 release of first quarter results to

September 30th 2018

December 2018 annual meeting of shareholders

26


100

120

80

Jun

12

Ju

n 1

3

Jun

14

Jun

15

Jun

16

Jun

17

80

100

120CDL

semedex

171615141312

Semdex 120

CDL 111

share price information

evolution of the company’s share price compared

to the Semdex over the past five years

code of ethics

The company and its employees are committed to the highest standards of professional integrity and ethical conduct in dealing with all its stakehold-ers. The company is in the process of developing a Code of ethics, which will apply to all directors, officers, employees, including agents and rep-resentatives. The Code of ethics will outline the responsibilities and guidelines that describe the ethical standard expected and will be available for consultation on the website of the company in due course.

sustainability reporting

The company is committed to the development and implementation of social health and safety and environmental policies and practices in line with existing legislatives and regulatory framework.

carbon reduction commitment

Environment consciousness is among one of the most important business practices of the company and the group. The group wishes to go further in the strengthening and affirmation of the group’s identity as an eco-friendly destination by building on several ad hoc green initiatives that have been taken over a certain period of time, like the use of eco-friendly biodegradable detergents when it comes to the cleaning of the premises and recycling of used oils among others. The group has reduced paper consumption through the elimination of paper invoices by sending them electronically.

The most visible and ambitious action taken at this level is the inculcation of environmental awareness to all staff, visitors and tenants via the implementation of selective separation and sort-ing of waste with the provision of adapted bins.

In the coming year, the group will continue to work towards bringing consistency to its environ-ment friendly policy and actions in view of putting up a structured and full-fledged project that will strengthen the group’s commitment towards sus-tainable development, thus enabling us to meet international standards with regard to environ-mental consciousness.

directors’ service contracts

There are no service contracts between the com-pany or its subsidiaries and the directors.

directors’ indemnity insurance

The company has contracted an indemnity insur-ance cover for the directors’ liability.

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28

China Town

Port Louis Theatre

C A U D A N D E V E L O P M E N T L I M I T E D 2 0 1 729directors’ remuneration

remuneration and benefits received and receivable

from the company and its subsidiaries

T H E CO M PA N Y S U BS I D I A R I E S

MRs000 2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6

Full time executive

directors 60 60 - -

Non-executive directors 405 430 60 60

465 490 60 60

The directors’ fees and remuneration are in accor-dance with market rates. They have not been disclosed on an individual basis due to the sensi-tive nature of the information.

contract of significance

During the year under review, there was no con-tract of significance to which the company was a party and in which a director was materially inter-ested either directly or indirectly.

auditors’ fees

fees payable to the auditors for audit and other

services, year ended June 30th 2017

T H E G R O U P T H E CO M PA N Y

MRs000 2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6

BDO & Co

Audit services 611 592 277 270

Other services 200 - 200 -

811 592 477 270

material clauses of the constitution

There are no clauses of the constitution deemed material to be disclosed.

shareholders agreement

There is currently no shareholders agreement af fecting the governance of the company by the board.

third party management agreement

There were no such agreements during the year under review.

statement of remuneration philosophy

The company’s remuneration philosophy concern-ing directors provides that:

> there should be a retainer fee for each director ref lecting the workload, size and complexity of the business as well as the responsibility involved. It should be the same for all directors whether executive or non-executive directors;

> the chairperson having wider responsibilities should have higher remunerations;

> there should be committee fees for directors. The chairperson should have higher remuneration than members.

The remuneration philosophy for management and staff is based on meritocracy and ensures that:

> fairness is promoted throughout the organisation and;

> opportunity is given to staff members to bene-fit from the financial result and development of the company.

Eligible staff members are entitled to receive a bonus based on the performance of the company and their own rated performance appraisal during the year.

Generally, the finalisation of remuneration pack-ages is based on a number of factors including qualif ications, skills and experience, past per-formance, personal potential, market norms and practices, and levels of responsibilities.

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30donations

T H E G R O U P T H E CO M PA N Y

MRs000 2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6

Corporate social

responsibility 200 330 74 2

Other 50 88 50 88

250 418 124 90

No political donations were made during the year (2016: nil).

corporate social responsibility

T he g roup has always been commit ted in providing voluntary support to Non-Governmental Organisations (NGOs) on request and sponsorship to individuals and associations for the promotion of education, arts and culture and sport activities. Le Caudan Waterfront has indeed always been actively involved in empowerment through the provision of free mall space and the promotion of local arts and crafts, artistic exhibitions and cultural as well as sports events.

The commitment of the group towards corporate social responsibility was strengthened with the incorporation of Caudan Communauté, a special purpose vehicle (sPv) which was incorporated in 2010 to implement the specific csr programme of the group. Its main responsibilities consist of financing and working closely in partnership with all stakeholders of the community: the public through ngos engaged in social work, other foundations which have similar objectives and the authorities, namely the national corporate social responsibility foundation (ncsrf).

The management of Caudan Communauté has been entrusted to a committee composed of repre-sentatives of the group to translate the philosophy and vision of the group in all csr activities. The field of intervention of Caudan Communauté is as follows:

> promotion of socio-economic development, including poverty alleviation and the improve-ment of gender and human rights;

> promotion of development in the fields of health, education and training, leisure and environment;

> intervention and support during and following catastrophic events; and

> under taking or par ticipation in programmes approved by the ncsrf.

Since its operation, Caudan Communauté has contributed in the following areas namely:

> support to vulnerable groups: children, women in distress and handicapped;

> education: literacy programmes and training;> health: support to the rehabilitation of patients

suf fer ing f rom mental disorder, inadapted children and fight against AIDS;

> human values: fight against corruption;> arts and culture: opportunities for development

of talented musicians;> sports: promotion of sports events; > environment: creation of green spaces outside

the work place; and> empowerment of women and children.

Dur ing the year, the highlight s of the c sr programme have been the sponsorship of:

> child care centres’ monthly costs for children of eligible employees;

> Business Mauritius which has provided some support to the victims of the flood which occured in the North; and

> the Lois Lagesse Trust Fund (school for the blind) in upgrading its infrastructures and water proofing works.

statement of directors’ responsibilities

Company law requires the directors to prepare financial statements for each financial year which present fairly the financial position, financial per-formance and cash flow of the company and of the group. In preparing those financial statements, the directors are required to:

> select suitable accounting policies and then apply them consistently;

> make judgements and estimates that are reason-able and prudent;

> state whether International Financial Report-ing Standards have been followed and complied with, subject to any material departures dis-closed and explained in the financial statements and;

> prepare the financial statements on the going concern basis unless it is inappropriate to pre-sume that the company will continue in business.

The directors are responsible for keeping proper accounting records which disclose with reason-able accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Compa-nies Act 2001. The directors are also responsible to ensure that:

> an effective system of internal control and risk management has been maintained and;

> the code of corporate governance has been adhered to.

The external auditors are responsible for report-ing on whether the financial statements are fairly presented.

Approved by the board of directors on September 28th 2017 and signed on its behalf by

René Leclézio Director

Bertrand de Chazal Director


Central Market

32STATEMENT OF COMPLIANCE(SECTION 75 (3) OF THE FINANCIAL REPORTING ACT)

name of company

Caudan Development Limited

reporting period

Year ended June 30th 2017

We, the Directors of Caudan Development Limited, con-firm to the best of our knowledge, that the company has complied with all its obligations and requirements under the code of Corporate Governance except for Section 2.8.2 of the Code, as explained on page 29 of the Corporate Governance Report.

Approved by the board of directors on September 28th 2017 and signed on its behalf by

René Leclézio Director

Bertrand de Chazal Director

I cer tify that to the best of my knowledge and belief the company has filed with the Registrar of Companies all such returns as are required of the company under the Companies Act 2001.

Jocelyne Martin

Company Secretary

September 28th 2017

COMPANY SECRETARY’S CERTIFICATE


Champ de Mars

34Key Audit MattersKey audit matters are those matters that, in our pro-fessional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1. Valuation of investment property Key Audit MatterThe Group carries its investment properties at fair value, with changes in fair value being recognized in profit or loss. The fair value as determined by the Directors reflects the present day market value arrived at based on the Sales Comparison approach, the Depreciated Replacement Cost approach and the Income Capitalisation approach as appropriate and as provided by independent valuers’ valuation. The judgements and estimates used in these calculations resulted in the carrying value of the investment proper-ties being a key area of focus for our audit.

Related DisclosuresRefer to note 2, note 1 accounting policies and note 1A critical accounting estimates of the accompanying financial statements.

Audit ResponseOur audit procedures include testing of design, exis-tence and operating effectiveness of internal control procedures implemented as well as test of details to ensure existence, valuation and completeness of the investment properties. We tested the key inputs to the valuation of the investment properties as follows:

> Assessment and discussion of management’s pro-cess for the valuation exercise and appointment of the external valuers. We also assessed the compe-tence, independence and integrity of the external valuers.

> Obtained the external valuation reports and dis-cussed with the external valuers about the results of their work on a sample of properties. We discussed and challenged the valuation process, performance of the portfolio, significant judgments and assump-tions applied to the valuation model, including yields, occupancy rates and capitalisation rates. We benchmarked and challenged the key assumptions to external industry data and comparable property valuation where available.

> Testing the integrity of a sample of the data used by the external valuers. This included verifying a sample of information used by the external valuers to under-lying documentation.

This report is made solely to the members of Caudan Development Limited (the “Company”), as a body, in accordance with Section 205 of the Companies Act 2001. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permit-ted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Report on the audit of the Financial Statements

OpinionWe have audited the consolidated financial statements of Caudan Development Limited and its subsidiaries (the Group), and the Company’s separate financial statements on pages 38 to 78 which comprise the statements of financial position as at June 30, 2017, and the statements of profit or loss and other compre-hensive income, statements of changes in equity and statements of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements on pages 38 to 78 give a true and fair view of the financial position of the Group and of the Company as at June 30, 2017, and of their financial performance and their cash flows for the year then ended in accordance with Interna-tional Financial Reporting Standards and comply with the Companies Act 2001.

Basis for OpinionWe conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group and of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the finan-cial statements in Mauritius, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

INDEPENDENT AUDITORS’ REPORT to the members

C A U D A N D E V E L O P M E N T L I M I T E D 2 0 1 7352. Revenue recognition Key Audit MatterThe Group’s Turnover consists of rental income and income from security services. Revenue is measured and recognised in accordance with the Group’s policy. We focused on this area due to the significance value of revenue for the Group and the risk attached to the timing of recognition of revenue.

Related DisclosuresRefer to note 1 accounting policies, and note 25 segmental reporting of the accompanying financial statements.

Audit ResponseOur audit procedures to address the risk of material misstatement relating to revenue recognition included:

> Testing the design and operating effectiveness of the key controls, the information used and manage-ment’s review and approval of revenue recognised.

> An understanding of key controls management has in place to ensure that revenue is recognised in the appropriate period and in line with the respective terms and conditions.

> Ensuring completeness of income through substan-tive tests performed, analytical review procedures and cut off tests on the revenue recognised.

Other information The Directors are responsible for the other informa-tion. The other information comprises the information included in the financial highlights/performance sum-mary, corporate information and chairperson’s statement does not include the financial statements and our auditor’s report thereon. The chairperson’s statement is expected to be made available to us after the date of this auditor’s report. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the chairperson’s statement, if we con-clude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Directors and Those Charged with Governance for the Financial Statements The directors are responsible for the preparation and fair presentation of the financial statements in accor-dance with International Financial Reporting Standards and in compliance with the requirements of the Com-panies Act 2001, and for such internal control as the directors determine is necessary to enable the prepa-ration of the financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Group and the Compa-ny’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and the Company or to cease operations, or have no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group and the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit con-ducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered mate-rial if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exer-cise professional judgment and maintain professional scepticism throughout the audit. We also: > Identify and assess the risks of material misstate-

ment of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than

36for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepre-sentations, or the override of internal control.

> Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effec-tiveness of the Group and the Company’s internal control.

> Evaluate the appropriateness of accounting policies used and the reasonableness of accounting esti-mates and related disclosures made by directors.

> Conclude on the appropriateness of directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group and the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evi-dence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and the Company to cease to continue as a going concern.

> Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

> Obtain sufficient appropriate audit evidence regard-ing the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal con-trol that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to commu-nicate with them all relationships and other matters that may reasonably be thought to bear on our inde-pendence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation pre-cludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements Companies Act 2001 We have no relationship with, or interests in, the Company or any of its subsidiaries, other than in our capacity as auditors, and dealings in the ordinary course of business.

We have obtained all information and explanations we have required.

In our opinion, proper accounting records have been kept by the Company as far as it appears from our examination of those records.

Financial Reporting Act 2004The Directors are responsible for preparing the corpo-rate governance report. Our responsibility is to report the extent of compliance with the Code of Corporate Governance as disclosed in the annual report and on whether the disclosure is consistent with the require-ments of the Code.

In our opinion, the disclosure in the annual report is consistent with the requirements of the Code.

BDO & Co Chartered Accountants

Ameenah Ramdin fcca, acalicensed by frc

September 28th 2017, Port-Louis, Mauritius

Maillard street

FIN

AN

CIA

L S

TATE

MEN

TS

38STATEMENTS OF FINANCIAL POSITION T H E G R O U P T H E C O M P A N YMRs000 note 2 0 1 7 2 0 1 6 2 0 1 5 2 0 1 7 2 0 1 6 2 0 1 5

restated restated restated restated

Assets July 1st July 1st

Non-current assets Investment property 2 3,834,800 3,710,005 3,669,165 3,465,944 3,340,529 3,321,184

Prepaid operating leases 3 451 457 463 451 457 463

Property, plant and equipment 4 171,697 174,001 174,759 49,799 50,079 48,718

Intangible assets 5 1,503 2,704 4,037 64 83 94

Investments in subsidiary companies 6 - - - 14,247 14,247 14,247

Investments in associate and jointly

controlled entities 7,8 - - - - - -

Deferred tax assets 15 5,553 5,132 4,344 - - -

Trade receivables 11 3,402 4,154 4,834 - - -

4,017,406 3,896,453 3,857,602 3,530,505 3,405,395 3,384,706

Current assetsInventories 10 15,672 11,537 9,546 3,121 2,931 2,489

Trade and other receivables 11 282,854 126,871 118,459 428,971 290,663 229,748

Cash and cash equivalents 305 318 592 165 131 96

298,831 138,726 128,597 432,257 293,725 232,333

Total assets 4,316,237 4,035,179 3,986,199 3,962,762 3,699,120 3,617,039

Equity and liabilities

Capital and reserves attributable to owners of the parentShare capital 12 2,000,000 819,520 819,520 2,000,000 819,520 819,520

Other reserves 18 (165) 2,797 2,850 - 2,862 2,862 Retained earnings 13 1,935,190 2,118,680 2,108,026 1,489,216 1,693,369 1,666,127

Total equity 3,935,025 2,940,997 2,930,396 3,489,216 2,515,751 2,488,509

Liabilities

Non-current liabilitiesBorrowings 14 - 599,500 636,500 - 599,500 636,500

Deferred tax liabilities 15 142,512 131,987 130,004 101,890 94,942 90,434

Retirement benefit obligations 16 21,397 17,973 15,752 8,271 7,688 7,565

163,909 749,460 782,256 110,161 702,130 734,499

Current liabilitiesOther payables 17 136,518 98,805 96,132 283,385 239,364 235,233

Current tax liabilities 785 338 1,444 - - -

Borrowings 14 - 245,579 175,971 - 241,875 158,798

Dividend proposed 24 80,000 - - 80,000 - -

217,303 344,722 273,547 363,385 481,239 394,031

Total liabilities 381,212 1,094,182 1,055,803 473,546 1,183,369 1,128,530

Total equity and liabilities 4,316,237 4,035,179 3,986,199 3,962,762 3,699,120 3,617,039

MRs Net assets per share 1.97 3.53 2.94 3.53 2.93 3.53 1.74 3.53 2.523 3.53 2.49

Number of shares 2,000,000,000 1,000,000,000 1,000,000,000 2,000,000,000 1,000,000,000 1,000,000,000

These financial statements have been approved for issue by the board of directors on September 28th 2017 and are signed on its behalf by

René Leclezio Director Bertrand de Chazal Director

The notes on pages 42 to 78 form an integral part of these financial statements. The auditors’ report is on pages 34 to 36.

C A U D A N D E V E L O P M E N T L I M I T E D

June 30th 2017

39STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME T H E G R O U P T H E C O M P A N Y MRs000 note 2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6 restated restated

Revenue 1 492,119 461,486 202,033 181,876

Net gain from fair value adjustment on investment property 2 3,161 - 4,031 -

Operating expenses (375,214) (392,899) (121,138) (106,105)

Operating profit 19 120,066 68,587 84,926 75,771

Non-recurring item 23 (14,996) - (14,996) -

Finance costs 20 (22,530) (55,907) (22,522) (55,796)

Finance income 20 11,547 839 21,490 12,499

Profit before income tax 94,087 13,519 68,898 32,474

Taxation 21 (17,950) (2,722) (13,424) (5,089)

Profit for the year attributable to owners of the parent 76,137 10,797 55,474 27,385

Other comprehensive incomeItems that will not be reclassified to profit or lossRemeasurement of retirement benefit obligations 16 (352) (168) (352) (168)

Deferred tax on remeasurement of retirement benefit obligations 15 53 25 53 25

Items that may be reclassified subsequently to profit or lossExchange difference on translating foreign operations (100) (53) - -

Other comprehensive income for the year attributable to owners of the parent (399) (196) (299) (143)Total comprehensive income for the year attributable to owners of the parent 75,738 10,601 55,175 27,242

MRe

Earnings per share 22A 0.0448 0.0108

Adjusted earnings per share 22B 0.0520 0.0108



year ended June 30th 2017

40STATEMENTS OF CHANGES IN EQUITYAttributable to owners of the parent share other retained total MRs000 note capital reserves earnings equity

T H E G R O U P

At July 1st 2015

As previously reported 819,520 2,850 2,099,306 2,921,676

Prior year adjustment 30 - - 8,720 8,720

As restated 819,520 2,850 2,108,026 2,930,396

Profit for the year - restated - - 10,797 10,797

Other comprehensive income - (53) (143) (196)

At June 30th 2016 819,520 2,797 2,118,680 2,940,997

At July 1st 2016


Prior year adjustment 30 - - 7,000 7,000

As restated 819,520 2,797 2,118,680 2,940,997

Bonus Issue 180,480 (2,862) (177,618) -

Rights Issue net of issue costs 1,000,000 - (1,710) 998,290

Profit for the year - - 76,137 76,137

Dividends 24 - - (80,000) (80,000)

Other comprehensive income - (100) (299) (399)

At June 30th 2017 2,000,000 (165) 1,935,190 3,935,025

T H E C O M P A N Y

At July 1st 2015


Prior year adjustment 30 - - 215 215

As restated 819,520 2,862 1,666,127 2,488,509

Profit for the year - restated - - 27,385 27,385

Other comprehensive income - - (143) (143)

At June 30th 2016 819,520 2,862 1,693,369 2,515,751

At July 1st 2016


Prior year adjustment 30 - - 715 715

As restated 819,520 2,862 1,693,369 2,515,751

Bonus Issue 180,480 (2,862) (177,618) -

Rights Issue net of issue costs 1,000,000 - (1,710) 998,290

Profit for the year - - 55,474 55,474

Dividends 24 - - (80,000) (80,000)

Other comprehensive income - - (299) (299)

At June 30th 2017 2,000,000 - 1,489,216 3,489,216




41STATEMENTS OF CASH FLOWS T H E G R O U P T H E C O M P A N Y

MRs000 2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6

Cash flows from operating activitiesCash received from tenants 245,315 211,981 199,201 175,308

Security fees received 241,589 252,562 - - Cash payments net of other operating receipts (353,301) (377,973) (122,372) (104,867)

Cash generated from operations 133,603 86,570 76,829 70,441

Interest paid (22,639) (55,663) (22,654) (55,488)

Interest received 11,300 839 21,243 12,499

Net income tax (paid)/refunded (2,766) 3,196 (1,694) 3,775

Net cash generated from operating activities 119,498 34,942 73,724 31,227

Cash flows from investing activitiesPurchase of property, plant and equipment (15,004) (18,417) (3,085) (7,309)

Purchase of intangible assets (173) (244) (17) (22)

Payments in respect of investment property (114,331) (52,230) (112,514) (27,851)

Net amount refunded from/(granted to) subsidiary companies - - 13,405 (43,842)

Amount (paid on behalf of)/received from joint venture (589) 108 - -

Proceeds from disposals of property, plant and equipment 607 572 16 -

Other cash (outflows)/inflows (2,222) 2,551 (1,472) 1,919

Net cash used in investing activities (131,712) (67,660) (103,667) (77,105)

Cash flows from financing activitiesRepayments of bank borrowings (636,500) (37,000) (636,500) (37,000)

Net loan (refunded to)/granted by parent (178,000) 178,000 (178,000) 178,000

Loan granted to parent (141,079) - (127,008) -

Loan paid to other institution - (163) - -

Proceeds from Rights Issue 1,000,000 - 1,000,000 -

Transaction costs in respect of Rights Issue (1,710) - (1,710) -

Net cash generated from financing activities 42,711 140,837 56,782 141,000

Net increase in cash and cash equivalents 30,497 108,119 26,839 95,122 Cash and cash equivalents at beginning of the year (30,261) (138,216) (26,744) (121,702)

Effect of foreign exchange rate changes 69 (164) 70 (164)

Cash and cash equivalents at end of the year 305 (30,261) 165 (26,744)

Analysis of cash and cash equivalents disclosed aboveBank and cash balances 305 318 165 131

Bank overdrafts - (30,579) - (26,875)

305 (30,261) 165 (26,744)




42Standards, Amendments to published Standards and Inter-pretations effective in the reporting periodifrs 14 Regulatory Deferral Accounts provides relief for first-

adopters of ifrs in relation to accounting for certain balances that arise from rate-regulated activities (‘regulatory deferral accounts’). ifrs 14 permits these entities to apply their previous accounting policies for the recognition, measurement, impair-ment and derecognition of regulatory deferral ac-counts. The standard has no impact on the Group’s/Company’s financial statements.

(Amendments to ifrs 11) Accounting for Acquisitions of Interests in Joint

Operations. The amendments clarify the accounting for the acquisition of an interest in a joint operation where the activities of the operation constitute a business. They require an investor to apply the principles of business combination accounting when it acquires an interest in a joint operation that constitutes a business. Existing interests in the joint operation are not remeasured on acquisition of an additional interest, provided joint control is maintained. The amendments also apply when a joint operation is formed and an existing business is contributed. The amendment has no impact on the Group’s/Company’s financial statements.

(Amendments to ias 16 and ias 38) Clarification of Acceptable Methods of Depreciation

and Amortisation. The amendments clarify that a revenue-based method of depreciation or amorti-sation is generally not appropriate. Amendments clarify that a revenue-based method should not be used to calculate the depreciation of items of prop-erty, plant and equipment. ias 38 now includes a rebuttable presumption that the amortisation of in-tangible assets based on revenue is inappropriate. This presumption can be overcome under specific conditions. The amendment has no impact on the Group’s/Company’s financial statements.

(Amendments to ias 27) Equity method in separate financial statements. The

amendments allow entities to use the equity method in their separate financial statements to measure investments in subsidiaries, joint ventures and as-sociates. ias 27 currently allows entities to measure their investments in subsidiaries, joint ventures and associates either at cost or at fair value in their separate FS. The amendments introduce the equity method as a third option. The election can be made independently for each category of investment (sub-sidiaries, joint ventures and associates). Entities wishing to change to the equity method must do so retrospectively. The amendment has no impact on the Group’s/Company’s financial statements.

general information

Caudan Development Limited is a limited liability company incorporated and domiciled in Mauritius. The address of its registered office is Promotion and Development Ltd, 8th Floor, Dias Pier, Le Caudan Waterfront, Port Louis. The Company is listed on the official market of the Stock Exchange of Mauri-tius. These consolidated financial statements have been ap-proved for issue by the board of directors on September 28th 2017 and will be submitted for consideration and approval at the forthcoming annual meeting of the shareholders of the Company.

1 significant accounting policies

A summary of the principal accounting policies adopted in the preparation of these consolidated financial statements is set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparationThe financial statements of Caudan Development Limited comply with the Companies Act 2001 and have been prepared in accordance with International Financial Reporting Stand-ards (ifrs). The financial statements include the consolidated financial statements of the parent company and its subsidiary companies (the Group) and the separate financial statements of the parent company (the Company). The financial state-ments are presented in Mauritian Rupees and all values are rounded to the nearest thousand (MRs000), except when oth-erwise indicated. Where necessary, comparative figures have been amended to conform with changes in presentation in the current year. The financial statements are prepared under the historical cost convention, except that:> investment properties are stated at their fair value and;> relevant financial assets and financial liabilities are stated

at their fair value.

The preparation of financial statements in conformity with ifrs requires the use of certain critical accounting estimates. It also requires management to exercise their judgment in the pro-cess of applying the company’s accounting policies. Critical accounting estimates and assumptions used that are signifi-cant to the financial statements and areas involving a higher degree of judgment or complexity are disclosed in note 1a. There are no standards, amendments to published standards and interpretations effective for the first time in the reporting period.

notes to the financial statements

43(Amendments to ias 16 and ias 41) Agriculture: Bearer Plants. ias 41 now distinguishes

between bearer plants and other biological asset. Bearer plants must be accounted for as property plant and equipment and measured either at cost or revalued amounts, less accumulated depreciation and impairment losses. The amendment has no impact on the Group’s/Company’s financial statements.

Annual Improvements to ifrss 2012–2014 cycle ifrs 5 ifrs 5 is amended to clarify that when an asset (or

disposal group) is reclassified from ‘held for sale’ to ‘held for distribution’ or vice versa, this does not constitute a change to a plan of sale or distribution and does not have to be accounted for as such. The amendment has no impact on the Group’s/Company’s financial statements.

ifrs 7 ifrs 7 amendment provides specific guidance for

transferred financial assets to help management determine whether the terms of a servicing arrangement constitute ‘continuing involvement’ and, therefore, whether the asset qualifies for derecognition. The amendment has no impact on the Group’s/Company’s financial statements.

ifrs 7 is amended to clarify that the additional disclosures relating to the offsetting of financial assets and financial liabilities only need to be included in interim reports if required by ias 34. The amendment has no impact on the Group’s/Company’s financial statements.

ias 19 ias 19 amendment clarifies that when determining

the discount rate for post-employment benefit obligations, it is the currency that the liabilities are denominated in that is important and not the country where they arise. The amendment has no impact on the Group’s/Company’s financial statements.

ias 34 ias 34 amendment clarifies what is meant by the

reference in the standard to ‘information disclosed elsewhere in the interim financial report’ and adds a requirement to cross-reference from the interim financial statements to the location of that information. The amendment has no impact on the Group’s/Company’s financial statements.

(Amendments to ias 1) Disclosure Initiative. The amendments to ias 1

provide clarifications on a number of issues. An entity should not aggregate or disaggregate information in a manner that obscures useful information. Where items are material, sufficient information must be provided to explain the impact on the financial position or performance. Line items specified in ias 1 may need to be disaggregated where this is relevant to an understanding of the entity’s financial position or performance. There is also new guidance on the use of subtotals. Confirmation that the notes do not need to be presented in a particular order. The share of OCI arising from equity-accounted investments is grouped based on whether the items will or will not subsequently be reclassified to profit or loss. Each group should then be presented as a single line item in the statement of other comprehensive income.

(Amendments to ifrs 10, ifrs 12 and ias 28) Investment entities: Applying the consolidation

exception. The amendments clarify that the exception from preparing consolidated financial statements is also available to intermediate parent entities which are subsidiaries of investment entities. An investment entity should consolidate a subsidiary which is not an investment entity and whose main purpose and activity is to provide services in support of the investment entity’s investment activities. Entities which are not investment entities but have an interest in an associate or joint venture which is an investment entity have a policy choice when applying the equity method of accounting. The fair value measurement applied by the investment entity associate or joint venture can either be retained, or a consolidation may be performed at the level of the associate or joint venture, which would then unwind the fair value measurement. The amendment has no impact on the Group’s/Company’s financial statements.

Standards, Amendments to published Standards and Inter-pretations issued but not yet effective

Certain standards, amendments to published standards and interpretations have been issued that are mandatory for ac-counting periods beginning on or after January 1st 2017 or later periods, but which the Group/Company has not early adopted.


44the acquisition date. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the ac-quiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

The excess of (a) the aggregate of the consideration trans-ferred, the amount of any non-controlling interest in the ac-quiree and the acquisition-date fair value of any previous equity interest in the acquiree over (b) the net of the acqui-sition-date amounts of identifiable assets acquired and the liabilities assumed measured in accordance with ifrs 3 is re-corded as goodwill. In the case of a bargain purchase (excess of (b) over (a)), the resulting gain is recognised immediately in profit or loss as per last year.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unre-alised losses are also eliminated. The subsidiaries have con-sistently applied all the policies adopted by the group.

Transactions and non-controlling interestsThe group treats transactions with non-controlling interests as transactions with equity owners of the group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the car-rying value of net assets of the subsidiary is recorded in eq-uity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Separate financial statements of the companyIn the company’s financial statements, investments in sub-sidiary companies are carried at cost. The carrying amount is reduced to recognise any impairment in the value of individual investments.

Disposal of subsidiariesWhen the group ceases to have control, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subse-quently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts pre-viously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

Investments in associatesAn associate is an entity over which the group has significant influence, through participation in the financial and operating policy decisions but not control.

Investments in associates are accounted for using the eq-uity method of accounting, except when classified as held-for-sale, and are initially recognised at cost and adjusted by post acquisition changes in the group’s share of net assets of

At the reporting date of these financial statements, the fol-lowing were in issue but not yet effective:ifrs 9 Financial instrumentsifrs 15 Revenue from Contract with Customers(Amendments to ifrs 10 and ias 28) Sale or Contributions of Assets between an Investor

and its Associate or Joint Ventureifrs 16 Leases(Amendments to ias 12) Recognition of Deferred Tax Assets for Unrealised

LossesAmendments to ias 7 Statement of Cash Flows Clarifications to ifrs 15 Revenue from Contracts with Customers(Amendments to ifrs 2) Classification and Measurement of Share-based

Payment Transactions(Amendments to ifrs 4) Applying ifrs 9 Financial Instruments with ifrs 4

Insurance ContractsAnnual Improvements to ifrss 2014–2016 Cycleifric 22 Foreign Currency Transactions and Advance Consid-

eration(Amendments to ias 40) Transfers of Investment Propertyifrs 17 Insurance Contractsifric 23 Uncertainty over Income Tax Treatments

Where relevant, the Group/Company is still evaluating the ef-fect of these Standards, amendments to published Standards issued but not yet effective, on the presentation of its finan-cial statements.

Investments in subsidiary companiesConsolidated financial statementsSubsidiaries are all entities (including structured entities) over which the group has control. The group controls an en-tity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Sub-sidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the group. The consideration trans-ferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a busi-ness combination are measured initially at their fair values at

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S


45the associate. The group’s investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition.

The group’s share of its associates’ post acquisition profits or losses is recognised in profit or loss, and its share of post acquisition movements in reserves is recognised in reserves.

The carrying amount of the investment is reduced to recognise any impairment in the value of the individual investments. When the group’s share of losses exceeds its interest in an associate, the group discontinues recognising further losses, unless it has incurred legal or constructive obligation or made payments on behalf of the associate.

Unrealised gains on transactions between the group and its associates are eliminated to the extent of the group’s interest in the associates.

Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the group.

If the ownership interest in an associate is reduced but the significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive in-come are reclassified to profit or loss where appropriate.

Dilution gains and losses arising in investments in associates are recognised in profit or loss.

Investments in joint ventureA joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net as-sets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unani-mous consent of the parties sharing control.

Joint venture is accounted for using the equity method and, under this method, the investment is initially recognised at cost and the carrying amount is increased or decreased to recognise the group’s share of the profit or loss of the joint venture after the date of acquisition. The group’s share of its joint venture post acquisition profits or losses is recognised in the statement of profit or loss and its share of post-acquisi-tion movements in reserves in other comprehensive income. Goodwill arising on the acquisition of a joint venture entity is included with the carrying amount of the joint venture and tested annually for impairment. When the group’s share of losses exceeds the carrying amount of the investment, the lat-ter is reported at nil value. Recognition of the group’s share of losses is discontinued except to the extent of the group’s legal and constructive obligations contracted by the joint venture. If the joint venture subsequently reports profits, the group’s resumes recognising its share of those profits after accounting

for its share of unrecognised past losses. Unrealised profits and losses are eliminated to the extent of the group’s interest in the joint venture.

GoodwillGoodwill on consolidation represents the excess of the cost of acquisition over the fair value of the group’s share of the net identifiable assets and liabilities of the acquired subsidiary company or associate at the date of acquisition. Goodwill on acquisitions of subsidiary companies is included in intangible assets. Gains on bargain purchases represent the excess of the fair value of the group’s share of net assets acquired over the cost of acquisition and are recognised in profit or loss.

Goodwill on acquisitions of associates is included in invest-ment in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing.

Intangible assetsComputer softwareAcquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the spe-cific software. These costs are amortised over their estimated useful lives (not exceeding five years). Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred.

Costs that are directly associated with the production of iden-tifiable and unique software controlled by the group and that will generate economic benefits exceeding costs beyond one year are recognised as intangible assets. Direct costs include the software development employee costs and an appropriate portion of relevant overheads.

Customer list Customer list represents the value of the customer portfolio and is being amortised over a period of two years. The custom-er portfolio was previously tested for impairment annually.

Investment propertyInvestment property, which is property held for long-term rental yields and/or capital appreciation, and is not occupied by the companies in the group, is initially measured at cost, including transaction costs. Subsequent to initial recognition, it is stated at its fair value at the end of the reporting period. Gains or losses arising from changes in fair value of investment property are included in profit or loss for the period in which they arise. Property that is under construction or development to earn rentals or for capital appreciation or both is accounted as investment property.


46Gains and losses on disposal of property, plant and equip-ment are determined by comparing proceeds with their car-rying amount and included in profit or loss. On disposal of revalued assets, the amounts included in revaluation surplus are transferred to retained earnings.

Borrowing costsBorrowing costs directly attributable to the acquisition, con-struction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the cost of those assets.

All other borrowing costs are expensed in the period in which they are incurred.

Impairment of assetsAssets that have an indefinite useful life are not subject to am-ortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment when-ever events or changes in circumstances indicate that the car-rying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

Operating leasesLeases of assets under which all the risks and benefits of own-ership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to prof-it or loss on a straight-line basis over the period of the leases.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

Operating leases - lessorAssets leased out under operating leases are included in plant and equipment in the statement of financial position. They are depreciated over their expected useful lives on a basis con-sistent with similar fixed assets. Rental income is recognised on a straight line basis over the lease term.

InventoriesInventories are stated at the lower of cost and net realisable value. Cost is determined on the basis of either weighted aver-age price or on a first-in, first-out (FIFO) method. Costs com-prise direct costs. Net realisable value is the estimate of the selling price in the ordinary course of business less the costs of completion and selling expenses.

A full valuation is carried out every five years by external independent valuers. Each year the values are reviewed and updated by the valuers so as to identify if there is any material fluctuation in the fair value of the investment properties. Where after consultation with the independent valuers, the directors are satisfied that the book values of the investment properties reflect their fair values, no adjustment is made to the carrying values of investment properties during the period in between.

When the use of a property changes such that it is reclassified as property, plant and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting.

Prepaid operating lease paymentsLand held under an operating lease (including land on which the investment property is located) is accounted for as an operating lease. Where upfront payments for operating leases of land are made, these upfront payments are capitalised as non-current assets and in subsequent periods are presented at amortised cost so as to record a constant annual charge to the profit or loss over the lease term. These non-current assets are not revalued.

Property, plant and equipmentAll plant and equipment, as well as property, which are occupied by the group companies, is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the assets’ carrying amount or recognised as a separate asset as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably.

Properties in the course of construction for production, rental or administrative purposes or for purposes not yet determined are carried at cost less any recognised impairment loss. Costs include professional fees and for qualifying assets, borrow-ings costs are capitalised. Depreciation of these are on the same basis as other property assets, commences when the assets are ready for their intended use. Depreciation is calculated on the straight line method to write off the cost of assets to their residual values over their estimated useful lives as follows:

Buildings 1%Equipment, furniture and fittings 5–331/

3%

Motor vehicles 11%Land is not depreciated

The assets’ residual values and useful lives are reviewed and adjusted if appropriate at the end of each reporting period.

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.



47Spares and accessories included under inventories consist of items which are regularly used for repairs, maintenance and new installations.

Financial instrumentsFinancial assetsCategories of financial assetsThe group classifies its financial assets in the following categories: loans and receivables and available-for-sale financial assets.

The classification depends on the purpose for which the in-vestments were acquired. Management determines the clas-sification of its financial assets at initial recognition and re-evaluates this designation at the end of each reporting period.

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an ac-tive market. They arise when the group provides money, goods and services directly to a debtor with no intention of trading the receivable. They are included in current assets when ma-turity is within twelve months after the end of the reporting period or non-current assets for maturities greater than twelve months.

Long term receivablesLong term receivables with fixed maturity terms are measured at amortised cost using the effective interest rate method, less provision for impairment. The carrying amount of the asset is reduced by the difference between the asset’s carrying amount and the present value of estimated cash flows discounted us-ing the original effective interest rate. The amount of the loss is recognised in profit or loss. Long term receivables without fixed maturity terms are measured at cost. If there is objec-tive evidence that an impairment loss has been incurred, the amount of the impairment loss is measured as the difference between the carrying amount of the asset and the present value (pv) of estimated cash flows discounted at the current market rate of return of similar financial assets.

Trade receivablesTrade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of receivables.

The amount of provision is the difference between the as-set’s carrying amount and the present value of estimated fu-ture cash flows, discounted at the effective interest rate. The amount of provision is recognised in profit or loss.

Bank borrowingsBorrowings are recognised initially at fair value being their issue proceeds net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period.

Trade payablesTrade and other payables are stated at fair value and subsequently measured at amortised cost using the effective interest method.

Share capitalOrdinary shares are classified as equity.

Cash and cash equivalents Cash and cash equivalents include cash in hand and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statements of financial position.

Current and deferred income taxThe tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current taxThe current income tax charge is based on taxable income for the year calculated on the basis of tax laws enacted or sub-stantially enacted by the end of the reporting period.

Deferred taxDeferred income tax is provided in full, using the liability meth-od, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the fi-nancial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for.

Deferred income tax is determined using tax rates that have been enacted or substantively enacted at the reporting date and are expected to apply in the period when the related de-ferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised to the extent that it is prob-able that future taxable profit will be available against which deductible temporary differences can be utilised.


48Non-monetary items that are measured at fair value in a for-eign currency are translated using the exchange rates at the date the fair value was determined.

Translation differences on non-monetary items, such as equi-ties classified as available-for-sale financial assets are includ-ed in reserves in equity.

ProvisionsProvisions are recognised when the group has a present legal or constructive obligation as a result of past events, which it is probable, will result in an outflow of resources that can be reasonably estimated. Where the group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risk and uncertainties surrounding the obligation.

TurnoverTurnover consists of rental income, commissions and income from security activities.

Revenue recognitionRental income is recognised on the accruals basis.

Interest income is recognised on a time-proportion basis using the effective interest method. When a receivable is impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cash flows discounted at the original effective interest rate, and continues unwinding the discount as interest income.

Income from security activities is recognised in the year in which the services are rendered.

Dividend income is recognised when the shareholder’s right to receive payment is established.

Income from security activities comprises the sale of goods and services, net of value-added tax, rebates and discount. Sales of goods are recognised when goods are delivered and title has passed. Sales of services are recognised in the ac-counting year in which services are rendered.

Dividend distributionDividends are recorded in the financial statements in the pe-riod in which they are declared by the board of directors.

For the purposes of measuring deferred tax liabilities and deferred tax assets for investment properties that are meas-ured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebut-ted when the investment property is depreciable and is held within a business model whose objective is to consume sub-stantially all of the economic benefits embodied in the invest-ment property over time, rather than through sale.

Retirement benefit obligationsDefined contribution planA defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. The group has no legal or constructive obligations to pay future contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in cur-rent and prior periods. The company and its subsidiaries oper-ate a defined contribution retirement benefit plan for qualify-ing employees. Contributions are recognised as an employee benefit expense when they fall due.

Gratuity on retirementThe net present value of gratuity on retirement payable under the Employment Rights Act 2008 (as amended) has been pro-vided for in respect of those employees who are not covered or who are insufficiently covered by the above retirement benefit plan. The obligations arising under this item are not funded.

The Employment Rights Act stipulates that the Gratuity paid on Retirement should be based on the remuneration (which is inclusive of payment for extra work, productivity bonus, attendance bonus, commission in return for services and any other regular payment) of the employee. The amount due per year of service is 15 days remuneration based on a month of 26 days (15/26).

Foreign currenciesFunctional and presentation currencyThe consolidated financial statements are presented in Mauri-tian rupees, which is the company’s functional and presenta-tion currency.

Transactions and balancesForeign currency transactions are translated using the ex-change rates prevailing on the dates of the transactions. For-eign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end ex-change rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.



49Segment reportingAn operating segment is a component of the group that engag-es in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the group’s other components. All operating segments’ operating results are reviewed regularly by the group’s CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment re-porting is shown in note 25.

Transfer pricingThe group has presently no policy in respect of transfer pricing. Non-recurring itemsNon-recurring items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the group. There are material items of income or expense that have been shown separately due to the significance of their nature or amount.

Related partiesRelated parties are individuals and enterprises where the in-dividual or enterprise has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions.

Financial risk factorsThe group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value and cash flow interest risk and price risk), credit risk and liquidity risk.

The audit committee monitors closely the group’s significant risks. All risks issues are systematically addressed both at the audit committee and at the board level. The group’s exposure is managed and reviewed regularly.

The group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group’s financial performance.

Risk management is carried out by treasury department under policies approved by the board of directors.

Market riskCurrency riskThe group has foreign currency denominated cash balances and is exposed to foreign exchange risk arising from foreign currency exposure.

The impacts on post-tax profit are insignificant since the group holds small amount of foreign currency-denominated cash balances.

Cash flow and fair value interest rate riskAs the group has no significant interest-bearing assets, the group’s income and operating cash flows are substantially independent of changes in market interest rates. The group’s interest-rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the group to cash flow inter-est rate risk. The group’s interest rate risk is closely monitored by management on a regular basis which is then approved by the audit committee and the board of directors. Manage-ment systematically analyses the interest rate exposure and assesses the potential impact on the financial position of the group. Various scenarios are considered such as rescheduling of existing loans, early repayment options and renegotiating favourable interest rates. The risk is also managed by main-taining an appropriate level of debt and monitoring the gear-ing ratio.

At June 30th 2017, if interest rates on borrowings had been 50 basis points higher/lower during the year with all other variables held constant, post-tax profit for the year would have been MRs1.5m (2016: MRs3.5m) lower/higher for the group and MRs1.5 (2016: MRs3.5m) for the company, mainly as a result of higher/lower interest expense on floating rate borrowings.

Price riskThe group is exposed to equity securities price risk because of investments held by the group in subsidiary companies, and associated company. The company’s subsidiaries are un-quoted and are carried at cost in the separate financial state-ments. Impairment tests are performed regularly on these in-vestments. The group is not exposed to commodity price risk. Credit risk The group’s credit risk is primarily attributable to its trade re-ceivables. The amounts presented in the statements of finan-cial position are net of allowances for doubtful receivables, estimated by the group’s management based on prior experi-ence and the current economic environment.

The group has no significant concentration of credit risk, with exposure spread over a large number of customers and ten-ants. The group has policies in place to ensure that proper-ties are rented and services provided to customers with an appropriate credit history. Close monitoring is carried out on all trade receivables.

Liquidity risk Prudent liquidity management includes maintaining sufficient cash and marketable securities, the availability of funding from an adequate amount of committed credit facilities and the ability to close out market positions. The group is exposed to calls on its available cash resources from maturing loans.


50Analysis of the group’s financial liabilities into relevant maturity groupings based on the remaining period at the end of the reporting period to the contractual maturity date

less than between between over

YEARS 1 1 & 2 2 & 5 5

MRs000 THE GROUP

2 0 1 7 at June 30th

Borrowings - - - -

Other payables 136,518 - - -

2 0 1 6

Borrowings 245,579 41,500 270,000 288,000


MRs000 THE COMPANY

2 0 1 7 at June 30th

Borrowings - - - -


2 0 1 6

Borrowings 241,875 41,500 270,000 288,000


Fair value estimationThe fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise primarily of quoted equity investments classified as trading securities or available-for-sale. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments.

Capital risk managementThe group’s objectives when managing capital are:> to safeguard the group’s ability to continue as a going con-

cern, so that it can continue to provide returns for sharehold-ers and benefits for other stakeholders, and

> to maintain an optimal capital structure to reduce the cost of capital.

The group sets the amount of capital in proportion to risk. The group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to sharehold-ers, issue new shares, or sell assets to reduce debt.

Consistently with others in the industry, the group monitors capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net debt adjusted capital. Net debt is cal-culated as total debt adjusted for cash and cash equivalents and adjusted capital comprises all components of equity.

There were no changes in the group’s approach to capital risk management during the year.

The debt-to-adjusted capital ratios

MRs000 T H E G R O U P T H E C O M P A N Y

at June 30th 2017 2016 2017 2016

Total debt - 814,500 - 814,500

Cash and cash

equivalents (305) 30,261 (165) 26,744

Net (cash)/debt (305) 844,761 (165) 841,244

Total equity 3,935,025 2,940,997 3,489,216 2,515,751

Debt to adjusted

capital ratio (0.00) 0.29 (0.00) 0.33



511A Critical accounting estimates and

judgments

Estimates and judgments are continuously evaluated and are based on historical experience and other factors including ex-pectations of future events that are believed to be reasonable under the circumstances.

The resulting accounting estimates will, by definition, seldom equal the related actual results.

The fair value of available-for-sale financial assets and invest-ment property may therefore increase or decrease, based on prevailing economic conditions.

Estimate of fair value of investment propertiesThe group carries its investment properties at fair value, with change in fair value being recognised in the profit or loss. The fair value is determined by directors’ valuation based on inde-pendent valuer’s valuation.

For the purpose of the valuation carried out as at June 30th 2017, the sales comparison approach, depreciated replace-ment cost approach and income capitalization approach have been used.

Limitation of sensitivity analysisSensitivity analysis in respect of market risk demonstrates the effect of a change in a key assumption while other as-sumptions remain unchanged. In reality, there is a correlation between the assumptions and other factors. It should also be noted that these sensitivities are non-linear and larger or smaller impacts should not be interpolated or extrapolated from these results. Sensitivity analysis does not take into con-sideration that the assets and liabilities are managed.

Asset lives and residual valuesProperty, plant and equipment are depreciated over its useful life taking into account the residual values which are assessed annually and may vary depending on a number of factors such as technological innovation, maintenance programmes and fu-ture market condition. Consideration is also given to the extent of current profits and losses on the disposal of similar assets.

Depreciation policiesProperty, plant and equipment are depreciated to their resid-ual values over their estimated useful lives. The residual value of an asset is the estimated net amount that the group would currently obtain from disposal of the asset, if the asset was already of the age and in condition expected at the end of its useful life.

The directors therefore make estimates based on historical experience and use best judgment to assess the useful lives of assets and to forecast the expected residual values of the assets at the end of their expected useful lives.

Revenue recognitionThe percentage of completion method is utilised to recognise revenue on long-term contracts. Management exercises judg-ments in calculating the deferred revenue reserve which is based on the anticipated cost of repairs over the life cycle of the equipment applied to the total expected revenue arising from maintenance and repair contracts.

In addition, management exercises judgment in assessing whether significant risks and rewards have been transferred to the customer to permit revenue to be recognised.

Revenue arising from maintenance and repair work in progress is recognised on the percentage of completion basis.

Impairment of assetsGoodwill is considered for impairment at least annually. Prop-erty, plant and equipment and intangible assets are consid-ered for impairment if there is a reason to believe that impair-ment may be necessary. Factors taken into consideration in reaching such a decision include the economic viability of the asset itself and where it is a component of a larger economic unit, the viability of that unit itself.

Deferred tax on investment propertiesFor the purposes of measuring deferred tax liabilities or deferred tax assets arising from investment properties the directors reviewed the group’s investment property portfolio and concluded that the investment properties, excluding undeveloped land, are held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sale. Therefore, in determining the deferred taxation on investment properties, the directors have determined that the presumption that the carrying amounts of investment properties measured using the fair value model are recovered entirely through sale is rebutted.


52 2 investment property

l e v e l 2 T H E G R O U P freehold freehold freehold freehold long total total Le Caudan Le Caudan land & other buildings leasehold 2017 2016 Waterfront Waterfront buildings in progress buildings buildings in progress MRs000

Fair value At July 1st 3,457,555 - 103,000 - 149,450 3,710,005 3,669,165 Additions 533 119,169 - 1,932 - 121,634 40,840Net gain/(loss) from fair value adjustment on investment property 7,911 - - - (4,750) 3,161 -At June 30th 3,465,999 119,169 103,000 1,932 144,700 3,834,800 3,710,005

T H E C O M P A N Y

Fair value At July 1st 2,987,944 - 203,135 - 149,450 3,340,529 3,321,184 Additions 283 119,169 - 1,932 - 121,384 19,345 Net gain/(loss) from fair value adjustment on investment property 4,914 - 3,867 - (4,750) 4,031 - At June 30th 2,993,141 119,169 207,002 1,932 144,700 3,465,944 3,340,529

Basis of valuation

> Investment property comprises a number of offices, commercial and industrial properties rented to third parties. > An independent valuation of the properties was carried out at June 30th 2017 by Broll Indian Ocean Ltd, chartered valuers, using the sales comparison approach, depreciated replacement cost approach and income capitalisation approach. The group’s land and buildings have been revalued at their fair value on June 30th 2017. In the case of Le Caudan Waterfront, the value determined by the valuer has been based on the assumption that the property is sold as a bulk. > Bank borrowings are secured by floating charges on the assets of the borrowing companies including investment property (note 14). > In 2016, borrowings costs of MRs0.25m were capitalised during the year and included in ‘Additions’. > A capitalisation rate of 6.90%/6.65% was used representing the actual borrowing cost used to finance the project. > Rental income from investment property amounted to MRs249.2m (2016: MRs220.0m) for the group and MRs202.0m (2016: MRs181.9m) for the company. Direct operating expenses arising on the income generating investment property in the year amounted to MRs86.7m (2016: MRs104.2m) for the group and MRs86.3m (2016: MRs77.5m) for the company. No cost was incurred in respect of the non-income generating investment property.

3 prepaid operating lease payments

G R O U P A N D C O M P A N Y MRs000 2 0 1 7 2 0 1 6

Cost At July 1st and June 30th 602 602

AmortisationAt July 1st 145 139 Charge for the year 6 6 At June 30th 151 145

Net book valuesAt June 30th 451 457

> Amortisation charge for the group and the company has been included in operating expenses.



53 4 property, plant and equipment

T H E G R O U P land and furniture and motor total buildings equipment vehicles MRs000

Cost At July 1st 2015 138,151 114,309 44,111 296,571 Additions 8,008 5,497 4,529 18,034 Disposal/amount written off - (7,206) (5,984) (13,190)At June 30th 2016 146,159 112,600 42,656 301,415

At July 1st 2016 146,159 112,600 42,656 301,415 Additions 105 6,592 10,206 16,903 Disposal/amount written off - (10,821) (4,485) (15,306)At June 30th 2017 146,264 108,371 48,377 303,012

DepreciationAt July 1st 2015 9,009 81,424 31,379 121,812 Charge for the year 1,148 12,693 4,661 18,502 Disposal/amount written off adjustment - (6,916) (5,984) (12,900)At June 30th 2016 10,157 87,201 30,056 127,414

At July 1st 2016 10,157 87,201 30,056 127,414 Charge for the year 1,624 11,596 4,274 17,494 Disposal/amount written off adjustment - (10,383) (3,210) (13,593)At June 30th 2017 11,781 88,414 31,120 131,315

Net book valuesAt June 30th 2017 134,483 19,957 17,257 171,697 At June 30th 2016 136,002 25,399 12,600 174,001


54 4 property, plant and equipment continued

T H E C O M P A N Y buildings furniture and motor total equipment vehicles MRs000

Cost At July 1st 2015 39,942 31,915 5,437 77,294 Additions 5,062 304 - 5,366 Disposal/amount written off - (6,476) - (6,476)At June 30th 2016 45,004 25,743 5,437 76,184

At July 1st 2016 45,004 25,743 5,437 76,184 Additions 105 2,319 2,791 5,215 Disposal/amount written off - (97) (2,355) (2,452)At June 30th 2017 45,109 27,965 5,873 78,947

DepreciationAt July 1st 2015 5,450 21,015 2,111 28,576 Charge for the year 449 2,894 536 3,879 Disposal/amount written off adjustment - (6,350) - (6,350)At June 30th 2016 5,899 17,559 2,647 26,105

At July 1st 2016 5,899 17,559 2,647 26,105 Charge for the year 923 2,819 475 4,217 Disposal/amount written off adjustment - (74) (1,100) (1,174)At June 30th 2017 6,822 20,304 2,022 29,148

Net book valuesAt June 30th 2017 38,287 7,661 3,851 49,799 At June 30th 2016 39,105 8,184 2,790 50,079

> Bank borrowings are secured by floating charges on the assets of the group including property, plant and equipment (note 14). > Depreciation charge of MRs17.494m for the group (2016: MRs18.502m) and MRs4.217m for the company (2016: MRs3.879m) has been included in operating expenses.



55 5 intangible assets

T H E G R O U P computer other total software MRs000

Cost At July 1st 2015 3,516 3,221 6,737 Additions 217 - 217 Disposal/amount written off (15) (1,116) (1,131)At June 30th 2016 3,718 2,105 5,823

At July 1st 2016 3,718 2,105 5,823 Additions 173 - 173 At June 30th 2017 3,891 2,105 5,996

AmortisationAt July 1st 2015 2,700 - 2,700 Amortisation charge 434 - 434 Disposal adjustments (15) - (15)At June 30th 2016 3,119 - 3,119

At July 1st 2016 3,119 - 3,119 Amortisation charge 321 1,053 1,374 At June 30th 2017 3,440 1,053 4,493

Net book valuesAt June 30th 2017 451 1,052 1,503 At June 30th 2016 599 2,105 2,704

T H E C O M P A N Y

Cost At July 1st 2015 489 Additions 22 Disposal (15) At June 30th 2016 496

At July 1st 2016 496 Additions 17 At June 30th 2017 513

AmortisationAt July 1st 2015 395 Amortisation charge 33 Disposal adjustments (15) At June 30th 2016 413

At July 1st 2016 413 Amortisation charge 36 At June 30th 2017 449

Net book valuesAt June 30th 2017 64 At June 30th 2016 83

> Other intangible assets relate to consideration paid in respect of the acquisition of a customer list purchased in September 2005. > Amortisation charges of MRs1.374m (2016: MRs0.434m) for the group and MRs0.036m (2016: MRs0.033m) for the company are included in operating expenses.


56 6 investments in subsidiary companies

T H E C O M P A N Y MRs000 2 0 1 7 2 0 1 6

CostAt July 1st and June 30th 14,247 14,247

Subsidiaries of Caudan Development Limited class of year end stated capital direct indirect main shares and nominal holding holding business value of investment MRs000 % %

Best Sellers Limited ordinary June 25 - 100 dormant Caudan Communauté limited by December 1 50 - management of

guarantee CSR fund (not consolidated)

Caudan Leisure Ltd ordinary June 1,000 100 - leisure & propertyCaudan Security Services Limited ordinary June 10,000 100 - securityHarbour Cruise Ltd ordinary June 300 - 100 dormantSecurity & Property Protection Agency Co Ltd ordinary June 10,000 - 100 securitySociété Mauricienne d’Entreprise Générale Ltée ordinary June 3,000 100 - dormantSPPA CO Ltd ordinary June 26 - 100 security

> Société Mauricienne d’Entreprise Générale Ltée, Harbour Cruise Ltd and Best Sellers Limited did not trade during the year. > All the subsidiaries are incorporated and domiciled in the Republic of Mauritius except SPPA CO Ltd which is incorporated in the Republic of Seychelles. > None of the subsidiaries have debt securities.

7 investments in associate

A

T H E G R O U P MRs000 2 0 1 7 2 0 1 6

Share of net assets - -Goodwill - -At June 30th - -

CostAt July 1st and June 30th 19,076 19,076

Share of post acquisition reservesAt July 1st and June 30th (19,076) (19,076)

At June 30th - -



577 investments in associate continued

b The associated company of Caudan Development Limited

proportion of ownershipinterest and voting rights

Details of the associate at the end of the reporting period class of year end nature of principal country of direct indirect shares business place of incorporation business % %

2017 and 2016

Le Caudan Waterfront Casino Limited ordinary December leisure Mauritius Mauritius 39.20 39.20

> The above associate is accounted for using the equity method. > Since the associate has a different reporting date, management accounts have been prepared as at June 30th 2017. > The investment has been reduced to nil given that the entity’s share of losses exceeded its interests. The group will resume recognising its share of profit only after it will equal the share of losses not recognised.

c Summarised financial information

Summarised financial information in respect of the associate

current non current non revenue (loss)/ other total assets current liabilities current profit for compre- compre- assets liabilities the year hensive hensive income for income forMRs000 the year the year

2 0 1 7

Le Caudan Waterfront Casino Limited 40,905 23,839 51,389 93,325 160,413 (12,881) - (12,881)

2 0 1 6

Le Caudan Waterfront Casino Limited 34,234 29,705 44,782 86,246 173,300 5,899 - 5,899

> The summarised financial information above represents amounts shown in the associate’s financial statements prepared in accordance with ifrss adjusted forequity accounting purposes such as fair value adjustments made at the time of acquisition and adjustments for differences in accounting policies.

d Reconciliation of summarised financial information

Reconciliation of the above summarised financial information to the carrying amount in the financial statements:

opening (loss)/ other closing unrecog- ownership share of interest goodwill carrying net assets profit compre- net nised interest unrecog- in value July 1st for the hensive assets losses nised losses associates year income for and other and other the year comprehen- comprehen- MRs000 sive income sive income

2 0 1 7

Le Caudan Waterfront (67,089) (12,881) - (79,970) (56,946) 39.2% (22,323) - - - Casino Limited

2 0 1 6

Le Caudan Waterfront (72,988) 5,899 - (67,089) (44,065) 39.2% (17,273) - - -

Casino Limited


58 8 investments in joint venture

A

T H E G R O U P MRs000 2 0 1 7 2 0 1 6

Share of net assets - -

CostAt July 1st and June 30th 10 10

Share of post acquisition reservesAt July 1st and June 30th (10) (10)

At June 30th - -

b Details of the joint venture

proportion of ownership

interest andvoting rights

Details of the joint venture at the end of the reporting period class of year end nature of principal country of indirect shares business place of incorpora- business tion %

2 0 1 7 and 2 0 1 6

Integrated Safety and Security Solutions Ltd ordinary June security Mauritius Mauritius 50.00

> Integrated Safety and Security Solutions Ltd was incorporated in 2015 and started its operations in June 2015. It is a jointly controlled entity by Security and Property Protection Agency Co Ltd and FS Systems International Ltd, a company incorporated in Mauritius as a GBL Category 1 company. It is accounted for using the equity method. > The investment has been reduced to nil given that the entity’s share of losses exceeded its interests.

c Summarised financial information

Summarised financial information in respect of the joint venture current non current revenue loss other total assets current liabilities from compre- compre- assets continuing hensive hensive operations income for income for MRs000 the year the year

2 0 1 7

Integrated Safety and Security Solutions Ltd 5,086 604 8,079 3,990 (2,268) - (2,268)

2 0 1 6

Integrated Safety and Security Solutions Ltd 267 64 452 474 (35) - (35)

> The summarised financial information above represents amounts shown in the joint venture’s financial statements prepared in accordance with ifrss adjusted for equity purposes such as fair value adjustments accounting made at the time of acquisition and adjustments for differences in accounting policies.



59

d Reconciliation of summarised financial information

Reconciliation of the above summarised financial information to the carrying amount in the financial statements: opening loss for other com- closing unrecog- ownership share of interest net assets the year prehensive net nised interest unrecog- in July 1st income for assets losses nised joint the year losses venture MRs000

2 0 1 7

Integrated Safety and Security Solutions Ltd (121) (2,268) - (2,389) (2,389) 50.0% (1,195) -

2 0 1 6

Integrated Safety and Security Solutions Ltd (86) (35) - (121) (121) 50.0% (61) -

Classification of Integrated Safety and Security Solutions Ltd as a joint ventureIntegrated Safety and Security Solutions Ltd is a limited liability company whose legal forms confers separation between the parties to the joint arrangement and the company itself. Furthermore, there is no contractual arrangement that indicates that the parties to the joint arrangement have rights to the assets and obliga-tions for the liabilities of the joint arrangement. Accordingly, Integrated Safety and Security Solutions Ltd is classified as a joint venture.


60 9 financial instruments by category

The accounting policies for financial instruments have been applied to the items below

T H E G R O U P loans and receivables MRs000 2 0 1 7 2 0 1 6

Assets as per statements of financial positionTrade receivables 127,887 133,906 Loan receivable from holding company 141,079 - Receivables from joint venture 826 - Cash and cash equivalents 305 318

270,097 134,224

other financial liabilities MRs000 2 0 1 7 2 0 1 6

Liabilities as per statements of financial positionBorrowings - 845,079 Other payables 136,518 98,805

136,518 943,884

T H E C O M P A N Y loans and receivables MRs000 2 0 1 7 2 0 1 6

Assets as per statements of financial positionTrade receivables 46,000 49,308 Loan receivable from holding company 127,008 - Receivables from subsidiary companies 114,550 127,871 Loan to subsidiary company receivable at call 100,000 100,000 Cash and cash equivalents 165 131

387,723 277,310

other financial liabilities MRs000 2 0 1 7 2 0 1 6

Liabilities as per statements of financial positionBorrowings - 841,375 Other payables 283,385 239,364

283,385 1,080,739



61 10 inventories

T H E G R O U P T H E C O M P A N Y MRs000 2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6

Spares and accessories 3,121 2,931 3,121 2,931 Consumables 1,652 1,489 - - Work in progress 3,838 1,792 - - Goods for resale 7,061 5,325 - -

15,672 11,537 3,121 2,931

Costs of inventories recognised as expense and included inCost of sales 16,836 14,386 - - Operating expenses 6,569 5,871 2,839 2,597

> The bank borrowings are secured by floating charges over the assets of the group including inventories (note14).

11 trade and other receivables

A


Trade receivables 127,887 133,906 46,000 49,308 Less provision for impairment of receivables (65,891) (67,848) (34,970) (34,814)Trade receivables - net 61,996 66,058 11,030 14,494 Prepayments 2,058 2,831 475 734 Payments made on account 42,127 1,401 42,080 1,044 Loan receivable from holding company 141,079 - 127,008 - Receivables from subsidiary companies - - 114,550 127,871 Receivables from joint venture 826 - - - Loan to subsidiary company receivable at call - - 100,000 100,000 Income tax receivable 2,399 6,961 671 5,402 Other receivables 35,771 53,774 33,157 41,118

286,256 131,025 428,971 290,663

Less non-current portionTrade receivables (3,402) (4,154) - -

282,854 126,871 428,971 290,663

> The fair value of trade and other receivables equals their carrying amount. The carrying amounts of the group’s trade and other receivables are denominated in mauritian rupee.

b Ageing analysis of these trade receivables


Current 25,101 27,350 5,835 7,202 1 to 3 months 27,268 24,137 5,560 7,659 4 to 6 months 8,817 9,053 2,072 4,677 Over 6 months 66,701 73,366 32,533 29,770

127,887 133,906 46,000 49,308


62 11 trade and other receivables continued

c Trade receivables past due but not impaired

> At June 30th 2017, trade receivables of MRs16.361m (2016: MRs17.908m) for the group and MRs3.461m (2016: MRs3.779m) for the company were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default.

The ageing analysis of these trade receivables


1 to 3 months 16,361 16,162 3,461 3,779 4 to 6 months - 1,746 - -

16,361 17,908 3,461 3,779

Fair value of collateral1 to 3 months 3,547 2,084 3,309 1,893

The collaterals include cash deposits and bank guarantees received from tenants.

d Trade receivables past due and impaired

> As of June 30th 2017, trade receivables of MRs86.425m (2016: MRs88.648m) for the group and MRs36.704m (2016: MRs38.327m) for the company were impaired. The amount of the provision was MRs65.891m (2016: MRs67.848m) for the group and MRs34.970m (2016: MRs34.814m) for the company. It was assessed that a portion of the receivables is expected to be recovered.

The ageing of these receivables


1 to 3 months 10,907 7,975 2,099 3,880 4 to 6 months 8,817 7,307 2,072 4,677 Over 6 months 66,701 73,366 32,533 29,770

86,425 88,648 36,704 38,327

Fair value of collateral

1 to 3 months 285 1,931 193 766 4 to 6 months 84 1,017 84 842 Over 6 months 311 3,228 300 2,457

680 6,176 577 4,065



63

Movement in the provision for impairment of trade receivables


At July 1st 67,848 73,911 34,814 28,568 Net provision for impairment 7,915 12,410 4,933 10,555 Receivables written off during the year as uncollectible (9,872) (18,473) (4,777) (4,309)At June 30th 65,891 67,848 34,970 34,814

> The creation and release of provision for impaired receivables have been included in operating expenses in the statements of profit or loss and other comprehensive income. Amounts are generally written off when there is no expectation of recovering additional cash. > The other classes within trade and other receivables do not contain impaired assets. > The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above.

12 share capital

2 0 1 7 2 0 1 6 MRs000

Issued and fully paidAt July 1st 819,520 819,520 Bonus Issue 180,480 - Rights Issue 1,000,000 - At June 30th 2,000,000 819,520

> Further to the approval of shareholders at a special meeting held on August 10th 2016, the company issued to its shareholders on August 31st 2016, 180,480,000 bonus shares in the proportion of 0.220226474 share for each share held at that date and thereafter a proposed Rights Issue of one new ordinary share for each ordinary share held after the Bonus Issue at an issue price of MRe1.00 each, totalling 1,000,000,000 new ordinary shares and resulting in an overall total issue of 1,180,480,000 new ordinary shares. At June 30th 2017, the share capital therefore stood at MRs2bn.

13 retained earnings

the company subsidiaries associates consolidation the group MRs000 adjustment

At July 1st 2016 As previously reported 1,692,654 465,870 (19,076) (27,768) 2,111,680 Effect of adjusting Gratuity on retirement 715 6,285 - - 7,000 As restated 1,693,369 472,155 (19,076) (27,768) 2,118,680 Bonus Issue (177,618) - - - (177,618)Transaction costs in respect of Rights Issue (1,710) - - - (1,710)Profit attributable to shareholders 55,474 24,641 - (3,978) 76,137 Dividends (80,000) - - - (80,000)Other comprehensive income for the year (299) - - - (299)At June 30th 2017 1,489,216 496,796 (19,076) (31,746) 1,935,190


64 14 borrowings

T H E G R O U P T H E C O M P A N Y MRs000 note 2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6

Bank overdrafts A - 30,579 - 26,875 Bank loan B - 636,500 - 636,500 Loan from parent C - 178,000 - 178,000 Other loan - - - -

- 845,079 - 841,375

CurrentBank overdrafts - 30,579 - 26,875 Bank loan - 37,000 - 37,000 Loan from parent payable at call - 178,000 - 178,000 Other loan - - - -

- 245,579 - 241,875

Non-currentBank loan - 599,500 - 599,500

Total borrowings - 845,079 - 841,375

A Bank overdrafts

> The bank overdrafts were secured by floating charges over the assets of the group.

B Bank loan

> Bank loans bore interest annually at 6.65% during the year June 30th 2017 and at June 30th 2016. > Bank loans are secured by a floating charge over the assets of the group including inventories, investment property and property, plant and equipment.

C Loan from parent

> The unsecured loan from parent bore interest at 6.65% annually at June 30th 2016.

The group’s borrowings are denominated in mauritian rupee. The carrying amounts of borrowings were not materially different from their fair values.

The exposure of the borrowings to interest rate changes at the end of the reporting period


Within one year - 245,579 - 241,875 After one year and before two years - 41,500 - 41,500 After two years and before three years - 46,000 - 46,000 After three years and before five years - 224,000 - 224,000 After five years - 288,000 - 288,000

- 845,079 - 841,375



65 15 deferred tax

Deferred tax liability/(asset)

as previously effect of restated at (credit)/ credit to at June 30th reported adjusting at July 1st charge to statement 2017 at July 1st Gratuity on 2016 statement of of other 2016 retirement profit or loss comprehensive income MRs000

T H E G R O U P

Accelerated capital allowances 1,423 - 1,423 (467) - 956 Provisions (7,665) 1,110 (6,555) 46 - (6,509)Deferred tax assets (6,242) 1,110 (5,132) (421) - (5,553)

Accelerated capital allowances 43,486 - 43,486 6,660 - 50,146 Provisions (7,876) 115 (7,761) (323) (53) (8,137)Fair value gains 101,994 - 101,994 475 - 102,469 Tax losses (5,732) - (5,732) 3,766 - (1,966)Deferred tax liabilities 131,872 115 131,987 10,578 (53) 142,512

Net deferred tax 125,630 1,225 126,855 10,157 (53) 136,959

Deferred tax liabilities

T H E C O M P A N Y

Accelerated capital allowances 42,966 - 42,966 6,610 - 49,576 Provisions (7,002) 115 (6,887) (214) (53) (7,154)Fair value gains 58,863 - 58,863 605 - 59,468

94,827 115 94,942 7,001 (53) 101,890

> There is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets and liabilities when the deferred income taxes relate to the same fiscal authority of the same entity. The following amounts are shown in the statements of financial position.

T H E G R O U P T H E C O M P A N Y 2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6 MRs000 restated restated

Deferred tax assets (16,612) (20,048) (7,154) (6,887)Deferred tax liabilities 153,571 146,903 109,044 101,829

136,959 126,855 101,890 94,942

> Deferred income taxes are calculated on all temporary differences under the liability method at 15%.


66 15 deferred tax continued

T H E G R O U P T H E C O M P A N Y note 2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6 MRs000 restated restated

The movement in the deferred income tax account

At July 1st As previously reported 125,630 124,121 94,827 90,396 Effect of adjusting Gratuity on retirement 1,225 1,539 115 38 As restated 126,855 125,660 94,942 90,434 Charge to profit or loss 21 10,157 1,220 7,001 4,533 Credit to other comprehensive income (53) (25) (53) (25)At June 30th 136,959 126,855 101,890 94,942

16 retirement benefit obligations


Amounts recognised in the statements of financial positionOther post retirement benefits (gratuity on retirement) 21,397 17,973 8,271 7,688

Amounts recognised in the statements of profit or loss and other comprehensive incomeRelease in respect of leavers (966) (1,441) (183) - Provision for the year 4,922 4,987 1,251 690 Total included in employee benefit expense 19A 3,956 3,546 1,068 690

Movement in the liability recognised in the statements of financial positionAt July 1st As previously reported 26,198 26,011 8,518 7,818 Effect of adjusting Gratuity on retirement (8,225) (10,259) (830) (253)As restated 17,973 15,752 7,688 7,565 Gratuity on retirement paid (149) (758) (102) - Benefits paid (735) (735) (735) (735)Amount charged to other comprehensive income 352 168 352 168 Expense for the year 3,956 3,546 1,068 690 At June 30th 21,397 17,973 8,271 7,688

> Other post retirement benefits comprise gratuity on retirement payable under the Employment Rights Act 2008 (as amended).

17 other payables


Amounts owed to parent 2,542 748 2,124 680 Amounts owed to subsidiary companies - - 181,531 179,482 Amounts owed to related parties - 12 - - Social security and other taxes 4,652 5,453 635 1,673 Defined contribution plan 802 1,500 187 334 Advance monies 33,597 36,773 27,865 30,283 Other payables and accrued expenses 94,925 54,319 71,043 26,912

136,518 98,805 283,385 239,364

> Other payables are interest free and have settlement dates within one year. The carrying amounts of other payables approximate their fair values.



67 18 other reserves

T H E G R O U P share translation total premium reserve MRs000

At July 1st 2015 2,862 (12) 2,850 Currency translation differences - (53) (53)At June 30th 2016 2,862 (65) 2,797

At July 1st 2016 2,862 (65) 2,797 Currency translation differences - (100) (100)Bonus Issue (2,862) - (2,862)At June 30th 2017 - (165) (165)

T H E C O M P A N Y share premium MRs000

At July 1st 2015 and 2016 2,862 Bonus Issue (2,862)At June 30th 2017 -

> Share premiumThe share premium account includes the difference between the value of shares issued and their nominal value. The share premium was used to issue bonus shares.

> Translation of foreign operationsThe translation reserve comprises all foreign currency differences arising from the translation of financial statements of foreign operations.

19 operating profit


Operating profit is arrived at after crediting Rental income 249,234 219,957 202,033 181,876 Sale of goods 18,595 13,627 - - Sale of services 224,290 227,902 - - Profit on disposal of property, plant and equipment 570 572 - - and after chargingDirect property operating expenses 86,646 104,245 86,275 77,521 Cost of sales 199,442 202,068 - - Administrative expenses 61,777 59,348 25,986 20,156 Depreciation on property, plant and equipment Operational expenses 4 9,193 9,612 66 66 Administrative expenses 4 8,301 8,890 4,151 3,813 Amortisation of intangible assets 5 1,374 434 36 33 Amortisation of prepaid operating lease payments 3 6 6 6 6 Operating lease rentals 8,248 8,248 4,382 4,382 Property, plant and equipment written off 419 290 - 126 Loss on disposal of property, plant and equipment 162 - 162 - Corporate Social Responsibility 216 330 74 2


68 19 operating profit continued

A Analysis of employee benefit expense


Wages and salaries 196,383 193,083 33,158 21,688 Social security costs 10,364 10,560 1,294 1,176 Pension costsDefined contribution plan 8,490 8,358 1,658 1,628 Other post retirement benefits 16 3,956 3,546 1,068 690

219,193 215,547 37,178 25,182

20 finance income and costs

T H E G R O U P T H E C O M P A N Y MRs000 note 2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6

Finance costsInterest expenseBank overdrafts 357 6,975 308 6,314 Bank loan 18,969 44,613 18,969 44,613 Other loans at call 3,102 4,433 3,166 4,428 Foreign exchange loss 23 112 - 176 Other 79 20 79 265

22,530 56,153 22,522 55,796 Less interest capitalised 2 - (246) - -

22,530 55,907 22,522 55,796

Finance income Interest income (11,299) (839) (21,242) (12,499)Foreign exchange gain (248) - (248) -

(11,547) (839) (21,490) (12,499)

Net finance costs 10,983 55,068 1,032 43,297



69 21 income tax expense


Based on the profit for the year, as adjusted for tax purposes, at 15% 7,786 1,496 6,424 556 Underprovision/(overprovision) of tax in previous year 7 6 (1) - Deferred income tax movement for the year 15 10,157 1,220 7,001 4,533 Charge to statement of profit or loss 17,950 2,722 13,424 5,089

Deferred income tax charge/(credit)Accelerated capital allowances 6,193 4,577 6,610 5,330 Provisions (277) 768 (214) (797)Fair value gains 475 - 605 - Tax losses 3,766 (4,125) - -

10,157 1,220 7,001 4,533

> Reconciliation between the applicable income tax rate of 15.0% for the group and the company and the effective rate of income tax of the group of 19.1% (2016: 20.1%) and the company of 19.5% (2016: 15.7% ).

As a percentage of profit before income tax

T H E G R O U P T H E C O M P A N Y % 2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6 Income tax rate 15.0 15.0 15.0 15.0 Impact ofDisallowable items 4.5 8.1 4.9 2.9 Income not subject to tax (0.1) (0.3) - - Other differences (0.3) (2.5) (0.4) (2.2)Exempt income - (0.6) - - Balancing (allowance)/charge (0.1) 0.1 0.1 - Unrecognised deferred tax (assets)/liability in previous year (0.1) 0.3 (0.1) - Effect of different tax rates 0.1 - - - Unutilised tax losses 0.1 - - - Average effective income tax rate 19.1 20.1 19.5 15.7


70 22 earnings per share

A

> Earnings per share is calculated on the basis of the group profit for the year and the number of shares in issue and ranking for dividends during the two years under review.

T H E G R O U P 2 0 1 7 2 0 1 6 MRs000 restated

Profit attributable to owners of the parent 76,137 10,797

* restatedWeighted average number of shares in issue during the year (thousands) 1,701,370 1,000,000

B

> Adjusted earnings per share is calculated on the basis of the group profit for the year excluding non-recurring item and net gain from fair value adjustment on investment property divided by the number of shares in issue and ranking for dividends.

T H E G R O U P MRs000 2 0 1 7 2 0 1 6

Profit attributable to owners of the parent 76,137 10,797 Net gain from fair value adjustment on investment property (net of deferred tax) (2,687) - Non-recurring item 14,996 - Adjusted earnings attributable to owners of the parent 88,446 10,797 Weighted average number of shares in issue during the year (thousands) 1,701,370 1,000,000

* For comparative purposes, the earnings per share for 2016 was recomputed based on the number of ordinary shares further to the Bonus Issue.

23 non-recurring item

T H E G R O U P T H E C O M P A N Y MRs000 2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6 Project capital costs written off 14,996 - 14,996 -

24 dividend paid and proposed

G R O U P A N D C O M P A N Y MRs000 2 0 1 7 Final ordinary dividend of MRe0.04 per share paid in August 2017 (2016: Nil) 80,000

> On June 28th 2017, the directors declared a final dividend of MRe0.04 per share in respect of the year ended June 30th 2017. This dividend has been recog-nised as a liability at June 30th 2017 in accordance with ias 10.



71 25 segment information

2 0 1 7 property security eliminations total MRs000

RevenuesExternal sales 249,234 242,885 - 492,119 Intersegment sales 4,800 19,924 (24,724) - Total revenue 254,034 262,809 (24,724) 492,119

Segment result 117,919 2,147 - 120,066

Non-recurring item (14,996) - - (14,996)Finance income 10,953 594 - 11,547 Finance costs (22,517) (13) - (22,530)Profit before income tax 91,359 2,728 - 94,087 Taxation (16,971) (979) (17,950)Profit attributable to owners of the parent 74,388 1,749 - 76,137

Segment assets 4,226,341 89,896 4,316,237

Segment liabilities 263,921 36,506 300,427 Current tax liabilities - 785 785 Dividend proposed 80,000 - 80,000

343,921 37,291 381,212

Capital expenditure 126,862 11,848 138,710 Depreciation and amortisation 5,334 13,540 18,874

2 0 1 6 restated property security eliminations total MRs000

RevenuesExternal sales 219,957 241,529 - 461,486 Intersegment sales 4,800 19,109 (23,909) - Total revenue 224,757 260,638 (23,909) 461,486

Segment result 70,253 (1,666) - 68,587

Finance income 73 766 - 839 Finance costs (55,363) (544) - (55,907)Profit before income tax 14,963 (1,444) - 13,519 Taxation (2,565) (157) - (2,722)Profit attributable to owners of the parent 12,398 (1,601) - 10,797

Segment assets 3,946,938 88,241 4,035,179

Segment liabilities 1,056,224 37,620 1,093,844 Current tax liabilities - 338 338

1,056,224 37,958 1,094,182

Capital expenditure 49,642 9,449 59,091 Depreciation and amortisation 5,635 13,307 18,942


72 25 segment information continued

> All activities of the group are carried out in Mauritius.

> Products and services from which reportable segments derive their revenuesIn prior years, segment information reported externally was analysed on the basis of activities undertaken by each of the group’s operating divisions and the same information was provided to management. The group’s reportable segments under ifrs 8 are as follows:

Segment ActivityProperty rental incomeSecurity security and property protection services and sales of equipment

> The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. Intersegment sales and transfers are accounted as if the sales or transfers were to third parties at current market prices.

> Factors that management used to identify the entity’s reportable segmentsReportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.

> Geographical informationNo material revenues were derived from customers outside Mauritius. All of the non current assets are found in Mauritius.

26 commitments and contingencies


CapitalCommitment in respect of future capital expenditure authorised by the directors and not provided in the financial statements 800,793 750,000 800,793 750,000


Future minimum lease payments under non-cancellable operating leases Not later than 1 year 3,932 6,831 3,932 3,932 Later than 1 year and not later than 2 years 3,932 3,932 3,932 3,932 Later than 2 years and not later than 5 years 11,796 11,796 11,796 11,796

19,660 22,559 19,660 19,660

> The lease is in respect of land at Riche Terre which expires on May 31st 2031 and is renewable for another period of twenty years and a further period of thirty nine years. > Rental income derived from rental of industrial building at Riche Terre amounts to MRs10.936m (2016: MRs8.356m).

Operating leases


Future minimum lease payments receivable under non-cancellable operating leasesNot later than 1 year 158,716 183,168 122,767 132,739 Later than 1 year and not later than 5 years 199,307 242,135 185,236 199,325 Later than 5 years 74,574 86,727 87,492 103,860

432,597 512,030 395,495 435,924

> The leases have varying terms, escalation clauses and renewal rights. There are no restrictions imposed on the group by the lease arrangements.



73 26 commitments and contingencies continued

Contingencies

T H E G R O U P MRs000 2 0 1 7 2 0 1 6

Contingent liabilitiesBank guarantees to third parties 3,500 3,500 Bank guarantees to third parties on behalf of joint venture 1,698 -

5,198 3,500

27 parent and ultimate parent

The directors regard Promotion and Development Ltd, which is incorporated in the Republic of Mauritius, as the parent, ultimate parent and ultimate controlling party.

28 three-year summary of published results and assets and liabilities

T H E G R O U P July 1st 2 0 1 7 2 0 1 6 2 0 1 5 MRs000 restated restated

Statements of profit and loss and other comprehensive incomeTurnover 492,119 461,486 461,611 Profit before income tax 94,087 13,519 2,669 Share of loss of associate - - - Taxation (17,950) (2,722) (1,266)Profit attributable to owners of the parent 76,137 10,797 1,403 Other comprehensive income for the year (399) (196) (444)Adjusted profit attributable to owners of the parent 88,446 10,797 1,403 Total comprehensive income attributable to owners of the parent 75,738 10,601 959

* restated * restated Net assets value per share 1.97 2.94 2.93 Rate of dividend (%) 4% - - Dividend per share (MRe) 0.04 - - Earnings per share (MRe) 0.0448 0.0108 0.0014 Adjusted earnings per share (MRe) 0.0520 0.0108 0.0014

* For comparative purposes, the net assets value per share and earnings per share for 2016 and 2015 were recomputed based on the number of ordi-nary shares further to the Bonus Issue.

T H E G R O U P 2 0 1 7 2 0 1 6 2 0 1 5 MRs000 restated restated

Statements of financial position

Non-current assets 4,017,406 3,896,453 3,857,602 Current assets 298,831 138,726 128,597 Total assets 4,316,237 4,035,179 3,986,199

Total equity 3,935,025 2,940,997 2,930,396 Non-current liabilities 163,909 749,460 782,256 Current liabilities 217,303 344,722 273,547 Total equity and liabilities 4,316,237 4,035,179 3,986,199


74 29 related party transactions

Transactions carried out by the group with related parties

2 0 1 7 (sale)/ rental/ payment operating manage- net net net loan emolu-

purchase other in respect expenses ment interest loan (given to)/ ments

of property income of invest- fees (income)/ (repaid to)/ repaid and

plant & ment expense/ expense received from benefits

equipment property (income) from

MRs000

Parent (5) 53 1,883 3,932 14,935 (7,659) (178,000) (141,079) - Associate - 19,263 - - - - - - - Associate of parent - 18,936 1,428 1,568 - - - - - Joint venture in which the group is a venturer - 1,509 - 337 (606) (63) - (520) - Shareholders with significant influence - 10,471 - 5,249 - 19,326 (636,500) - - Enterprises in which directors/key management personnel (and close families) have significant interest - 2,190 - 283 - - - - - Key management personnel and directors - 398 - - - - - - 10,743

2 0 1 6 restated

Parent 26 11 1,105 3,932 15,748 4,432 178,000 - - Associate - 15,663 - - - - - - - Associate of parent - 14,460 4,117 1,455 - - - - - Joint venture in which the group is a venturer - - - - 61 (5) (108) - - Shareholders with significant influence - 9,961 - 4,324 - 51,584 (37,000) - - Enterprises in which directors/key management personnel (and close families) have significant interest - 2,094 - 81 - - - - - Key management personnel and directors - 272 - - - - - - 10,870

Key management personnel compensation


Remuneration and other benefits relating to key management personnel, including directorsSalaries and short term employee benefits 10,145 10,274 6,184 6,277 Post employments benefits 598 596 220 282

10,743 10,870 6,404 6,559



75

Transactions carried out by the company with related parties

2 0 1 7 (sale)/ rental/ payment operating manage- net net net loan emolu-

purchase other in respect expenses ment interest loan (given to)/ ments

of property, income of invest- fees (income)/ (repaid to)/ repaid and

plant & ment expense expense received from benefits

equipment property from

MRs000

Parent (5) 44 1,883 3,932 11,161 (7,379) (178,000) (127,008) - Associate - 363 - - - - - - - Associate of parent - - 1,428 414 - - - - - Joint venture in which the group is a venturer - - - 337 - - - - - Subsidiary companies 1,827 6,279 - 12,412 - (10,677) - - - Shareholders with significant influence - 2,483 - 1,383 - 19,277 (636,500) - - Enterprises in which directors/key management personnel (and close families) have significant interest - 2,190 - 283 - - - - - Key management personnel and directors - - - - - - - - 6,404

2 0 1 6

Parent 26 - 580 3,932 13,058 4,428 178,000 - - Associate - 363 - - - - - - - Associate of parent - - 2,632 543 - - - - - Joint venture in which the group is a venturer - - - 473 - - - - - Subsidiary companies - 6,279 - 12,729 - (12,183) - - - Shareholders with significant influence - 2,459 - 458 - 50,924 (37,000) - - Enterprises in which directors/key management personnel (and close families) have significant interest - 2,094 - 81 - - - - - Key management personnel and directors - - - - - - - - 6,559

> The related party transactions were carried out on normal commercial terms and at prevailing market prices. > There is a management service fee contract between the company and Promotion and Development Ltd (PAD) which is the ultimate parent. The management fees paid to PAD are equivalent to (1) 5% of the net income after operating costs, but before interest, depreciation and tax, (2) 2.5% of the cost of construction and capital works, excluding professional fees, government fees and interest and (3) agents fees equivalent to 2 months’ basic rental on securing new tenants, one month’s basic rental on new contracts with existing tenants and 2% of gross consideration in respect of sales of property. > The key management personnel compensation consists only of salaries and employment benefits. None of the investments in associates have been impaired during the year. > For the year ended June 30th 2017, the group has not recorded any impairment of receivables relating to amounts owed by related parties (2016: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.


76 29 related party transactions continued

T H E G R O U P

Outstanding balances in respect of related party transactions at the end of the reporting period

2 0 1 7 receivables borrowings payables from related payable to related companies to related companies companies MRs000

Parent 141,079 - 2,542 Associate 10,350 - - Associate of parent 8,303 - 4 Joint venture in which the group is a venturer 826 - 6 Shareholders with significant influence 3,065 - 500 Enterprises in which directors/key management personnel (and close families) have significant interest - - 11 Key management personnel and directors 239 - -

2 0 1 6

Parent 39 178,000 787 Associate 975 - - Associate of parent 9,030 - 29 Joint venture in which the group is a venturer - - 12 Shareholders with significant influence 1,560 667,079 101Key management personnel and directors 100 - -



77 30 prior year adjustment

> Following an actuarial valuation at June 30th 2017 carried out by AON Hewitt Ltd, the group and the company have adjusted for an overprovision in respect of other post retirement benefits (gratuity on retirement). This difference and the impact on deferred tax have now been recognised with retrospective effect and comparative figures have been restated accordingly.

Analysis of prior year adjustment

T H E G R O U P deferred tax deferred tax retirement retained assets liabilities benefit earnings MRs000 obligations

At July 1st, 2015 As previously reported 5,845 (129,966) (26,011) 2,099,306 Effect of adjusting Gratuity on retirement (1,501) (38) 10,259 8,720 As restated 4,344 (130,004) (15,752) 2,108,026

At July 1st, 2016 As previously reported 6,242 (131,872) (26,198) 2,111,680 Effect of adjusting Gratuity on retirement (1,110) (115) 8,225 7,000 As restated 5,132 (131,987) (17,973) 2,118,680

T H E C O M P A N Y

At July 1st, 2015 As previously reported (90,396) (7,818) 1,665,912 Effect of adjusting Gratuity on retirement (38) 253 215 As restated (90,434) (7,565) 1,666,127

At July 1st, 2016 As previously reported (94,827) (8,518) 1,692,654 Effect of adjusting Gratuity on retirement (115) 830 715 As restated (94,942) (7,688) 1,693,369

T H E G R O U P T H E C O M P A N Y MRs000 2 0 1 6 2 0 1 6

The effect on profit for the year was as follows:(Increase)/decrease in operating expenses (2,034) 577 Decrease/(increase) in deferred tax expenses 314 (77)(Decrease)/increase in profit after tax (1,720) 500

Effect on earnings per share Earnings per share (MRe) (0.002)

31 currency

The financial statements are presented in thousands of Mauritian Rupees.


78 directors of subsidiaries

Directors of subsidiary companies holding office at the end of the accounting period

Caudan Leisure LtdRené LeclézioJocelyne Martin

Caudan Security Services LimitedRené LeclézioJocelyne MartinMooroogassen Soopramanien

Security and Property Protection Agency Co LtdDhunpathlall Bhima Bertrand de Chazal Deepak K. Lakhabhay René LeclézioJocelyne MartinMooroogassen Soopramanien

SPPA CO LtdDeepak K. Lakhabhay Mooroogassen Soopramanien

Harbour Cruise LtdRené Leclézio

Société Mauricienne d’Entreprise Générale Ltée & Best Sellers LimitedRené Leclézio

Caudan CommunautéRené LeclézioJocelyne Martin



C A U D A N . C O M


Dias Pier, Le Caudan WaterfrontPort Louis, MauritiusTelephone +230 211 94 30Fax +230 211 02 39Email [email protected]

Documents

ANNUAL REPORT 2017 - Caudan Waterfront · Limited is pleased to present its annual report for the year ended June 30th 2017. ... been incurred as part of our feasibility studies for